10 Undervalued Cyclical Stocks to Buy According to Analysts

2. MGM Resorts International (NYSE:MGM)

Forward PE ratio as of September 11: 11.59

Average Analyst Price Target Upside Potential: 59.33%

Number of Hedge Fund Holders: 44

MGM Resorts International (NYSE:MGM) is one of the top consumers cyclical stocks for gaining exposure into the resorts and casino space poised to receive a boost on interest rate cuts. The company operates casinos, hotels, and entertainment resorts in the United States and internationally. Its casino operations include slots and table games, as well as online sports betting and iGaming through BetMGM, which should receive a boost on consumer purchasing power edging higher on lower interest rates.

The outlook is improving for MGM Resorts International (NYSE:MGM) following prolonged periods of pandemic restrictions; its profit-generating casinos in the Chinese special administrative region of Macao are now experiencing a resurgence. For instance, MGM China’s revenues were up 78% in the first quarter, over $1.1 billion.

In the second quarter, MGM Resorts International (NYSE:MGM) China’s revenues increased by 37% compared to last year’s period, reaching $1.02 billion. This increase was mainly due to the acceleration of activities after lifting travel and entry limits related to COVID-19 in the first quarter of 2023. Casino income at MGM China rose by 33% year-on-year, reaching $891 million.

MGM China’s net earnings from its properties, after adjusting for interest, taxes, depreciation, amortization, and costs related to restructuring or rent, stood at $294 million, a significant rise from the $209 million recorded in the previous quarter.

MGM Resorts International (NYSE:MGM) saw a 3.6% rise in its total revenues in Q2, hitting $4.33 billion in the second quarter. The firm saw a major expansion in its activities in Las Vegas and Macau and significant advancements in its digital and global growth plans.

MGM Resorts seems on course to sustain its rebound, affirming why it is one of the best undervalued cyclical stocks to buy, according to analysts. It is generating greater profits than its primary rivals. Additionally, an upturn in Macao and the eventual launch of its casino in Japan are expected to benefit the stock in the long run.

MGM is currently trading at a discount to the industry, with a forward 12-month price-to-earnings (P/E) ratio of 11.61, well below the industry average of 27.84x. Of the 912 hedge funds tracked by Insider Monkey, 44 hedge funds reported owning stakes in MGM Resorts International (NYSE:MGM) in the second quarter of 2024. Wall Street analysts maintain a buy rating on the stock with an average price target of $55.56, implying a 59.33% upside potential.