5 Best Hotel Stocks To Buy Now

3. MGM Resorts International (NYSE: MGM)

Number of Hedge Fund Holders: 44

Casino resort operator MGM Resorts International (NYSE: MGM) ranks 3rd on the list of the 10 best hotel stocks to buy now. Headquartered in Las Vegas, MGM Resorts International owns casino firms, entertainment, and hotel resorts in the US and China. MGM Resorts’ portfolio includes 29 exclusive hotel and destination gaming offerings, including some of the industry’s most well-known resort brands like Bellagio, MGM Grand, ARIA, and Park MGM.

The company has a market cap of $20.4 billion and a full-year 2020 revenue of $5.2 billion, about 40% of 2019 revenues. Shares of MGM surged 198% over the past twelve months.

Keith Meister’s Corvex Capital held the most shares of MGM, with more than 22 million shares worth $710 million at the end of the fourth quarter. The total value of the shares held by 27 hedge funds in Q4 2020 was $2.17 billion.

Memphis-based Longleaf Partners Fund mentioned that MGM remains as one of the successful casino and entertainment companies amid a global crisis:

“MGM Resorts (54%, 2.10%; 46%, 2.32%), the casino and online gaming company, quickly became a top contributor for the year after we initiated the position in the third quarter. 3Q EBITDA came in moderately above breakeven, a strong improvement from the COVID lockdown-impacted second quarter. MGM’s regional casinos performed very well, while flight restrictions caused its Las Vegas properties to lag. More importantly, CEO William Hornbuckle finished implementing $450 million of necessary recurring annual cost savings, which should result in a 15% increase in pretax earnings once post-vaccine leisure travel resumes and MGM revenues normalize. The stock remains cheap against this post-reopening earnings power. BetMGM, the company’s new online gaming and sports-betting app, is on track for over $150 million revenues this year and growing very quickly in a market with enormous potential. Comparable pure-play digital gaming businesses trade for extremely high multiples today, and BetMGM has a sustainably superior economic model due to its lower customer acquisition costs.”