Is Red Rock Resorts (RRR) Trading at a Discount?

Baron Funds, an investment management company, released its “Baron Growth Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund rose 0.86% in the quarter (Institutional Shares), trailing the Russell 2000 Growth Index’s (the Benchmark) 11.97% gain.  The Russell 3000 Index returned 10.99% for the same period. The firm’s strategy of owning a high-conviction portfolio of highly advantaged businesses was out of favor in the quarter as investors bid up relatively riskier stocks. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Growth Fund highlighted stocks such as Red Rock Resorts, Inc. (NASDAQ:RRR). Headquartered in Las Vegas, Nevada, Red Rock Resorts, Inc. (NASDAQ:RRR) develops and operates casino and entertainment properties. One-month return of Red Rock Resorts, Inc. (NASDAQ:RRR) was -2.21%, and its shares gained 14.46% of their value over the last 52 weeks. On September 23, 2025, Red Rock Resorts, Inc. (NASDAQ:RRR) stock closed at $61.58 per share, with a market capitalization of $6.309 billion.

Baron Growth Fund stated the following regarding Red Rock Resorts, Inc. (NASDAQ:RRR) in its second quarter 2025 investor letter:

“Red Rock Resorts, Inc. (NASDAQ:RRR) is a casino owner and operator focused on the Las Vegas Locals market. Shares rose during the quarter as the market returned to growth following the successful absorption of Red Rock’s Durango property, which opened in December 2023. This recovery is expected to accelerate the return of customers to Red Rock’s other casino resorts and fully offset prior cannibalization by mid-2026. Red Rock is currently renovating and expanding its three core assets. While these projects may cause some near-term construction disruption, we expect them to drive stronger earnings growth next year and generate attractive returns on capital. The resulting increase in cash flow should support further casino development, debt reduction, and additional dividend payments. The stock trades at a discount to its historical average, which we find attractive given the company’s growth prospects and improving balance sheet.”

Red Rock Resorts, Inc. (NASDAQ:RRR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 32 hedge fund portfolios held Red Rock Resorts, Inc. (NASDAQ:RRR) at the end of the second quarter, up from 26 in the previous quarter. While we acknowledge the risk and potential of Red Rock Resorts, Inc. (NASDAQ:RRR) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Red Rock Resorts, Inc. (NASDAQ:RRR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Red Rock Resorts, Inc. (NASDAQ:RRR) and shared Diamond Hill Small-Mid Cap Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.