In this article, we will take a look at the 10 best Las Vegas stocks to buy now. You can skip our comprehensive analysis of these companies and go directly to the 5 Best Las Vegas Stocks to Buy Now.
The casino and gambling industry had suffered under COVID-19 as social distancing, remote working, and the suspension of commercial activities forced luxury resorts and gaming establishments to close their doors for business in early 2020. However, at the turn of the year, the economy seemed to be reopening, and there was a flurry of activity as the vaccine rollout allowed Las Vegas to welcome back tourists in limited numbers once again. On April 29, the Mississippi government even removed mask requirements for people at casinos.
The industry, which stood at $470 billion in 2020, is expected to grow to $520 billion this year at a compound annual growth rate of close to 11%. Major players in the industry are expected to lead this growth. MGM Resorts International (NYSE: MGM), one of the largest gaming companies in Las Vegas, reported quarterly revenues of $1.65 billion earlier this month, beating market estimates by $80 million. MGM Resorts International (NYSE: MGM) also reported earnings per share of -$0.68, narrowing losses and beating analyst predictions by $0.19.
It is not only the casino and hotel industry that will benefit from the upward trend in the gambling world. The firms who supply casino owners with the equipment they need to run the establishments are also set to register gains. Scientific Games Corporation (NASDAQ: SGMS), a gaming equipment manufacturer, is looking to capitalize on the digital trends of the pandemic and recently signed a cross-licensing agreement with a rival for cashless slot machines. Scientific Games Corporation (NASDAQ: SGMS) aims to market these slots to several casinos.
Established gaming firms like Las Vegas Sands Corp. (NYSE: LVS) have also been making steady gains as the government gradually allows 100% capacity at hotels and casinos. In Clark County, casinos will be able to operate at 80% starting next month and fully once the vaccination rate in their area reaches 60%. Las Vegas Sands Corp. (NYSE: LVS) has plans to expand in Texas as international revenue takes a hit due to the slow vaccine rollout in Asia. However, with China in the midst of mass vaccination drives, Macau is slowly recovering too.
Another notable stock to benefit from the upcoming recovery in the gaming sector is Wynn Resorts, Limited (NASDAQ: WYNN). Recently, investment firm Argus upgraded the stock, citing a strong recovery in Las Vegas and the company’s upbeat operations in Boston. The firm also likes Wynn Resorts, Limited (NASDAQ: WYNN)’s prospects in Macau, where it is investing in premium mass and luxury markets. The firm also noted that this casino company has launched iGaming/sports betting platform in 10 states.
Argus has a price target of $50 for Wynn Resorts, Limited (WYNN).
Some emerging trends in the industry for the new year include the impact of cryptocurrencies on the gambling industry, changing consumer habits with the rise in use of mobile phones and digital applications to satisfy gambling needs, and the shift to virtual reality-based gaming products around the world. Casinos will have to navigate these challenges deftly in order to recover from pandemic-related losses while holding on to their market shares. Land-based casinos can learn several lessons about industry disruption by observing hedge funds.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of 10 best Las Vegas stocks to buy now.
Best Las Vegas Stocks to Buy Now
10. Red Rock Resorts, Inc. (NASDAQ: RRR)
Number of Hedge Fund Holders: 26
Red Rock Resorts, Inc. (NASDAQ: RRR) is a Las Vegas-based gaming, development and management firm. It also has stakes in the casino and entertainment businesses. The company runs more than 20 gaming and entertainment establishments in Vegas. The units it operates house more than 13,000 slot machines and more than 3,000 table games. Red Rock Resorts Inc. (NASDAQ:RRR) also operates a resort facility in California. The company was founded in 2015 and is placed tenth on our list of 10 best Las Vegas stocks to buy now.
Red Rock Resorts, Inc. was called a top pick by investment advisory Union Gaming on February 10 after the Las Vegas firm posted encouraging quarterly results for the last three months of 2020. Union rated Red Rock stock a Buy with a price target of $39. Union termed Red Rock the cleanest fundamental of the gaming industry.
At the end of the fourth quarter of 2020, 26 hedge funds in the database of Insider Monkey held stakes worth $562 million in the firm, down from 29 the preceding quarter worth $361 million.
In the Q4 2020 Investor Letter, Baron Discovery Fund highlighted a few stocks and Red Rock Resorts Inc. (NASDAQ:RRR) is one of them. Here is what Baron Discovery Fund said:
“During the quarter we repurchased shares of prior holding, Red Rock Resorts Inc. (NASDAQ:RRR). The company, an operator of casinos that cater to residents in the locals Las Vegas market, reported strong third quarter results. Gaming revenue was up year-over-year despite the fact the company had 4 of its 10 casinos closed during the quarter. Significant cost improvements post-COVID has also led to significant margin improvement. We believe that coming out of COVID, the company will benefit from pent-up demand for leisure and entertainment combined with a permanently lower cost structure. As a result, we think a stronger and leaner Red Rock will show significant profit and free cash flow growth over the next few years.”
9. Monarch Casino & Resort, Inc. (NASDAQ: MCRI)
Number of Hedge Fund Holders: 14
Monarch Casino & Resort, Inc. (NASDAQ: MCRI) is a Nevada-based firm that runs the Atlantis Casino Resort Spa in Reno. The company owns and operates another resort in the Colorado area. The Monarch Casino is one of the biggest casinos of the area with more than 1,400 slot machines at the facility. The company was founded in 1972 and is ranked ninth on our list of 10 best Las Vegas stocks to buy now. The Monarch Casino also has more than 8 food outlets and close to 800 guest rooms for visitors and tourists.
Monarch Casino & Resort, Inc. (NASDAQ: MCRI) stock soared to new highs on April 29 after the firm posted record-breaking quarterly results for the first three months of 2021. The share price of the firm jumped more than 7% as it posted a quarterly revenue of more than $75 million. Investment advisory Union Gaming boosted price targets on Monarch from $77 to $80 the same day.
Out of the hedge funds being tracked by Insider Monkey, Texas-based investment firm Lafitte Capital Management is a leading shareholder in the firm with 655,257 shares worth more than $40 million.
8. Golden Entertainment, Inc. (NASDAQ: GDEN)
Number of Hedge Fund Holders: 13
Golden Entertainment, Inc. (NASDAQ: GDEN) is a Las Vegas-based firm that owns and operates casinos, taverns and slot routes. The firm is the largest tavern and slot owner in the area. The firm also has casino properties in Maryland. In addition to the casino business, the firm provides installation and maintenance services for gaming devices at restaurants, bars, and other public spaces. The firm was founded in 1998 and is placed eighth on our list of 10 best Las Vegas stocks to buy now.
Golden Entertainment, Inc. (NASDAQ: GDEN) was one of the few gaming firms that did not need external capital to stay afloat during the COVID-19 crisis in 2020. The share price of the firm is also below many Vegas rivals, making it a value play in the industry. It has a low risk profile with a 12% free cash flow yield.
At the end of the fourth quarter of 2020, 13 hedge funds in the database of Insider Monkey held stakes worth $95 million in the firm, up from 12 in the preceding quarter worth $67 million.
7. Everi Holdings Inc. (NYSE: EVRI)
Number of Hedge Fund Holders: 29
Everi Holdings Inc. (NYSE: EVRI) is a Spring Fields-based firm that makes and sells slot machines to casinos. The company also offers financial equipment and services to the same establishments. It has extensive business relations outside the United States as well, and provides machines and financial service to clients in Europe, Central America, and Asia. The company came into being in 1998 and is placed seventh on our list of 10 best Las Vegas stocks to buy now.
In September 2020, investment firm BTIG started coverage on Everi Holdings Inc. (NYSE: EVRI) stock with a Buy rating and a price target of $12. The investment firm said that there was significant upside potential for the holding company in 2021 as the demand for cashless solutions in the gaming industry was increasing rapidly.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in the firm with 2.3 million shares worth more than $32 million.
6. Boyd Gaming Corporation (NYSE: BYD)
Number of Hedge Fund Holders: 28
Boyd Gaming Corporation (NYSE: BYD) is a Paradise-based gaming and hospitality firm. It has close to 30 gaming properties in Nevada and eight other US states. The firm also owns and operates a travel agency. Boyd is placed sixth on our list of 10 best Las Vegas stocks to buy now and was founded in 1975. The company owns more than 21,000 slot machines and more than 400 game tables at its casinos. The revenue from gaming at these places accounts for more than 75% of the total revenue for the firm.
Boyd Gaming Corporation (NYSE: BYD) posted quarterly results on April 27, beating market estimates for earnings per share by $0.47 and reporting higher revenue than expected. The share price of the firm has been on an upward trajectory since the US government announced 50% capacity rules back in March.
At the end of the fourth quarter of 2020, 28 hedge funds in the database of Insider Monkey held stakes worth $275 million in the firm, the same as in the previous quarter worth $254 million.
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Disclosure: None. 10 Best Las Vegas Stocks to Buy Now is originally published on Insider Monkey.