Casino stocks are on a scorching streak this week.
Las Vegas Sands, Wynn, Caesars, Penn National Gaming and MGM Resorts have all surged in latest days, getting an enormous increase Tuesday after gambling vacation spot Macao eased restrictions for guests from mainland China.
This group has been extremely unstable over the previous 18 months, hit laborious by closures after which journey disruptions and uneven site visitors through the coronavirus pandemic.
So, is Lady Luck lastly on the casinos’ aspect?
Quint Tatro, president of Joule Financial, says sure … for one inventory.
“The easy play is Las Vegas Sands,” Tatro informed CNBC’s “Trading Nation” on Tuesday. “It was March of just this year we were on here speaking about their abrupt shift and their sale of all their Las Vegas properties to basically double down and focus on their Asia exposure. At the time, I think it was a big question mark.”
The advantages of that technique now make extra sense to Tatro in mild of China’s reopening and Macao’s rebound. Las Vegas Sands introduced within the first quarter that it might promote its Vegas properties together with its Venetian Resort for a complete of $6.25 billion.
“It still has a difficult balance sheet, it’s not the greatest balance sheet, but they do have $2 billion now in unrestricted cash that they can put where they see the best opportunity,” mentioned Tatro. “If this [rebound] is legit and we start to see a resurgence in the casino space, I think Las Vegas Sands is the play here.”
Las Vegas Sands has tumbled 36% from a March excessive. It is down 28% for the 12 months.
JC O’Hara, chief market technician at MKM Partners, mentioned the downturn within the China-exposed on line casino names has him cautious. Instead, he prefers DraftKings, a gambling inventory that he says seems to be to have stabilized after its pullback.
“It is reestablishing itself in an uptrend, breaking back above the 150-day moving average. So rather than trying to bottom pick some of these names and make calls on economic data, let’s look where the price action is positive and that’s DraftKings,” he mentioned throughout the identical interview.
O’Hara targets the March highs above $74 as a promising goal value and sees a band of help at $50. DraftKings closed Tuesday at $56.47.