Can you think of an industry that was hit harder during the onset of the pandemic more than resorts & casinos? Casino stocks were pummeled throughout 2020 as they reported sharp declines in revenue and earnings while people were stuck at home and practicing social distancing. It was hard for these stocks to catch a bid since there was so much uncertainty surrounding just how long it would take to stop the spread of the virus and return to a sense of normalcy. While casinos still face various challenges, the narrative might be changing quickly as more and more people get vaccinated and COVID-19 cases continue to sharply decline.
Casino stocks have been showing serious strength in recent weeks especially as we start to receive positive news that impacts the industry. For example, last week the announcement that visitors from mainland Chinawould no longer be required to quarantine when entering Macau was a big positive since many of the biggest casino operators have international locations there. There is also a good chance that the pent-up demand for visiting casinos could be a strong catalyst for these stocks going forward. Finally, investors should keep in mind that many of the major casino operators took dramatic cost-cutting measures last year that should boost earnings in the short-term and have lasting impacts on their bottom-lines.
If you’ve been holding off on adding exposure to casino stocks, now might be the right time to roll the dice. Let’s take a look at 2 casino stocks that are worth a look at this time.
One casino stock has been showing serious relative strength amidst the recent volatility in the market and is perhaps one of the best names in the industry to own for the long term. Wynn Resorts is a company that is involved in the design, development, financing, and construction of gaming projects in Las Vegas and Macau. One of the big tells that Wynn is gaining favor with investors again is the fact that the company issued a secondary offering of 6.5 million shares back in February that barely impacted the stock price. Like many of the major casino operators, Wynn reported a massive net loss for 2020 due to the impacts of the pandemic. That doesn’t mean investors should avoid the stock completely, as there are several encouraging signs to note about Wynn Resorts.
First, you have to like the aforementioned news that Macau has been easing quarantine rules on visitors from China and that Macau casinos saw a 136% surge in gambling revenue during February. There’s also the company’s foray into the online gaming market with its app called WynnBet that could be a strong growth driver over the long-term. The application recently received conditional approval for online sports betting in Tennessee and there are already 8 other states that WynnBet has gained market access to. Wynn’s management also recently stated in the Q4 earnings conference call that the company was seeing an increase in bookings. Wynn Resorts stock is up 26% year-to-date and could be worth adding on pullbacks.
Las Vegas Sands (NYSE:LVS)
Next, we have Las Vegas Sands, the world’s largest operator of fully integrated resorts that feature casino, hotel, food and beverage, entertainment, retail, and convention center operations. As you might imagine, the pandemic was pretty much the worst-case scenario for this company’s business model, and its earnings have been affected dramatically. For the full year 2020, Las Vegas Sands reported an operating loss of $1.69 billion compared to operating income of $3.7 billion in 2019. With that said, there are reasons to be optimistic about this industry-leading company going forward. Las Vegas Sands has already resumed operations in its various locations and seems to be focusing on creating a dominant position in Asia that will allow it to take advantage of high-growth areas like Macao.
This week, Las Vegas Sands shares got a slight boost when the company announced that it is selling its Las Vegas real estate property and operations for roughly $6.25 billion. The news was met with a favorable reaction on a volatile day in the market and could be a move that pays off in a big way for long-term shareholders. Las Vegas Sands can use the capital from the sale to further improve its position in Asia, a region that is primed for massive growth over the next decade. The company already has a leading position in Asia and generates about 90% of its EBITDA from the region. With properties like Marina Bay Sands in Singapore and the largest portfolio of properties on the Cotai Strip in Macao, this is the casino stock to own if you want international exposure. The stock is up 13.5% year-to-date and it’s hard to imagine a scenario where Las Vegas Sands doesn’t see a sharp rebound in earnings this year.
Featured Article: Yield Curve7 Outdoor Recreation Stocks For Growth And Dividends
If American’s liked outdoor activities before, they love them even more now. The COVID-19 pandemic has done many things, and one of them is reinvigorating American’s love of the outdoors. Data from across the industry shows a sustained uptick in revenue that has the entire complex moving higher.
The RV Industry Association, for example, reports shipments of RVs are up greater than 30% in 2020 and are expected to grow another 20% or more in 2021. If data from the two of the industry’s largest manufacturers are any indication, that forecast is very conservative.
And the gains aren’t limited to RVs. Everything that has anything to do with outdoor recreation is booming. Sales at Dicks Sporting Goods, an iconic brand for retail and the outdoors, has seen a sustained 20% increase in revenue since the 2nd quarter shutdowns. If anything, revenue in this sector is being held back by rapidly declining inventory and tight shipping conditions.
The stocks we are about to show all have something in common; the outdoors. Within the group, you will find everything from RVs to Radios and everything in between an outdoor enthusiast could need or want. Some pay dividends and some don’t, but all will deliver solid returns to investors in 2021.
View the "7 Outdoor Recreation Stocks For Growth And Dividends"
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