Casino stocks are on a hot streak.
Las Vegas Sands, Caesars, MGM and Wynn have outperformed the market this year, benefiting from a rotation into stocks tied to a reopening economy.
The four also rallied Wednesday after Sands signed a $6.25 billion to sell its Vegas properties to private equity firms Apollo Group and VICI Properties.
Mark Newton, president of Newton Advisors, says another looks to be the best bet in the pack.
“MGM is one that I think actually stands out as being a little bit more attractive than LVS at current levels,” Newton told CNBC’s “Trading Nation” on Wednesday. “MGM ironically used to be the real laggard and now all of a sudden, it’s gotten extraordinarily strong, has actually surpassed the former highs that we saw back in 2018.”
The stock is trading at levels not seen since 2008 and has surged 558% since lows last March.
“MGM is really the leader right now and the one you’d want to favor for strength,” Newton said.
MGM also looks to be a strong performer from a fundamental perspective, according to Quint Tatro, president of Joule Financial.
“We really think that MGM could go back to pre-Covid levels, earning well over $1 on adjusted EPS, which even at $40 a share, that kind of jump after seeing several couple of years now in the red is going to be a tremendous valuation,” Tatro said during the same interview. “Even though the stock has been on a tremendous run, I think it can continue. It’d be a buy in our opinion on any pullback so MGM we favor here for sure.”
MGM will report earnings in early May. For fiscal 2021, analysts surveyed by FactSet expect the casino operator to narrow losses to $1.95 a share from $3.94 in 2020. Sales are likely to rebound, too.
