In this article, we discuss the 11 best Las Vegas stocks to buy now. If you want to skip our detailed analysis of these stocks, then go directly to the 5 best Las Vegas stocks to buy now.
The casino and gambling industry saw the brunt of COVID-19 pandemic as lockdown restrictions impacted the entire industry. Bans on social gatherings, remote working, and complete suspension of economic activities forced the companies operating in gaming industry to shut their doors at the peak of COVID-19. However, with things getting back on track and growth revival, casino and online gaming industry should see the landscape changing. The gambling industry should continue to act as a significant contributor to economy, with revenues in billions. The industry offers employment opportunities to thousands of people and helps in generation of tax revenue for governments. Gambling businesses and casino companies range from small operations to large and multinational companies.
According to the American Gaming Association (AGA), U.S. commercial gaming revenue touched quarterly record of $15.17 billion in the third quarter of 2022. As a result, this beats the previous record of $14.81 billion in Q2 2022 by approximately 2%. Given the trend in initial 9 months of 2022, the year should be able to surpass 2021 as the highest-grossing commercial gaming revenue year ever. For the 9 months of 2022, U.S. commercial gaming revenue tracks 14.7% ahead of the same period of the previous year and has outpaced full-year revenue for FY19. Industry’s record success stems from high consumer demand. Commercial gaming saw a growth of 8.8% year-over-year in the third quarter of 2022, outpacing the U.S. economy’s growth rate of 2.6%.
As per the report released by Nevada Gaming Control Board, Nevada casinos raked in $1.28 billion in gambling revenue in October 2022. This was the 20th consecutive month where the casinos saw more than $1 billion in revenue.
As per Nevada Gaming Control Board, casinos in Nevada generated $12.3 billion in 10 months to October 2022. This exhibits 12.3% growth against the same period in 2021. Growth in the industry is likely to continue principally because of resilient consumer demand. Leading players in this industry are likely to support it.
Wynn Resorts, Limited (NASDAQ:WYNN), a leading player in the luxury casinos and resorts business, posted its results for Q3 2022. Its operating revenues came in at $889.7 million for Q3 2022, exhibiting a decrease of $104.9 million from $994.6 million in Q3 2021. In Macau, while COVID-19 continues to impact its business, the company saw pockets of demand during the recent October holiday period. Market should benefit from return of visitation over time.
Wynn Resorts (Macau) S.A. has signed an agreement for a 10-year period with Macau government about the renewal of its gaming concession, covering Wynn Macau and Wynn Palace Cotai.
Another leading player, Monarch Casino & Resort, Inc. (NASDAQ:MCRI) posted strong Q3 2022 results, with adjusted EBITDA jumping 28% against Q3 2021 to $51.7 million. It saw net revenues of $133.7 million in the third quarter of 2022, exhibiting 19.8% growth in comparison to $111.6 million in Q3 2021. Revenue increase stemmed from growth in business at Monarch Black Hawk, and continued strength at Atlantis.
While concerns regarding high inflation, rising interest rates, and lingering supply chain difficulties remain, the industry is expected to see extra capital investment. As per American Gaming Association, the gambling halls are on pace to see their strongest year in 2022.
With this context in mind, we present our list of 11 best Las Vegas stocks to buy now.
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Our Methodology
In order to identify the best Las Vegas stocks to buy we need to first identify the list of gaming stocks. For that purpose we used the holdings of VanEck Gaming ETF (BJK). In order to determine the best Las Vegas stocks to buy we then used Insider Monkey’s proprietary hedge fund sentiment database and ranked BJK’s holdings by their hedge fund popularity. So, our list demonstrates the best Las Vegas stocks to buy according to hedge funds.
11 Best Las Vegas Stocks to Buy Now
11. Light & Wonder, Inc. (NASDAQ:LNW)
No. of Hedge Fund Holders: 25
Light & Wonder, Inc. (NASDAQ:LNW), formerly known as Scientific Games Corp, offers gaming products, systems, and services to the lottery and pari-mutuel industries. The company focuses on providing high quality products and services to its customers across all 4 business segments i.e. Gaming, Lottery, SciPlay and Digital.
Light & Wonder, Inc. (NASDAQ:LNW) posted its results for the third quarter of 2022, with revenues coming at $648 million against $539 million in Q3 2021, exhibiting 20% growth year-over-year. This growth stemmed from all lines of business as double-digit revenue growth was seen in Gaming, signifying strong momentum. Apart from this, revenue was supported from year-over-year growth at SciPlay, which touched quarterly record. Consolidated AEBITDA came at $235 million, exhibiting 16% growth year-over-year. This was principally supported by growth in its Gaming business.
Craig Hallum initiated coverage on the shares of Light & Wonder, Inc. (NASDAQ:LNW) and reduced the price objective on the company’s shares to $85.00 on November 15.
With proceeds from its Lottery and Sports Betting divestitures, Light & Wonder, Inc. (NASDAQ:LNW) has significantly strengthened its balance sheet. As a result, it achieved a net debt leverage ratio of 3.1x, which is now squarely in its targeted range. Because of this significant milestone, it continues to focus on its capital allocation priorities of returning capital to shareholders.
Of the 920 hedge funds in our database, 25 owned shares of Light & Wonder, Inc. (NASDAQ:LNW) at the end of Q3, ranking the stock #11 on our list of 11 best Las Vegas stocks to buy now.
10. Churchill Downs Incorporated (NASDAQ:CHDN)
No. of Hedge Fund Holders: 28
Churchill Downs Incorporated (NASDAQ:CHDN) is a gaming entertainment, online wagering, and racing company. It carries out operations through 3 of its business segments: Live and Historical Racing, TwinSpires, and Gaming.
Churchill Downs Incorporated (NASDAQ:CHDN) has completed the purchase of substantially all of the assets of Peninsula Pacific Entertainment LLC for $2.75 billion. The acquisition includes all of the company’s assets and operations in Virginia, New York and Sioux City, Iowa. The acquisition also follows receipt of customary licensing approvals from Virginia Racing Commission, the Iowa Racing and Gaming Commission, and the New York State Gaming Commission.
In the third quarter of 2022, the company’s adjusted EBITDA grew by $6.8 million because of $1.8 million increase at Churchill Downs Racetrack due to higher number of race days in Q3 2022 against Q3 2021. Apart from this, adjusted EBITDA growth was supported by $5.0 million increase at its HRM properties.
Analysts at JPMorgan Chase & Co. initiated the coverage on the shares of Churchill Downs Incorporated (NASDAQ:CHDN) on December 8. They gave a “Neutral” rating with a $243.00 price objective on the stock.
28 elite hedge funds in our database were long shares of Churchill Downs Incorporated (NASDAQ:CHDN) at the end of Q3 2022. In the preceding quarter, 25 hedge funds held stakes in the company.
Alongside DraftKings Inc. (NASDAQ:DKNG), Boyd Gaming Corporation (NYSE:BYD), and Las Vegas Sands Corp. (NYSE:LVS), Churchill Downs Incorporated (NASDAQ:CHDN) is one of the 11 best Las Vegas stocks to buy now.
9. International Game Technology PLC (NYSE:IGT)
No. of Hedge Fund Holders: 29
International Game Technology PLC (NYSE:IGT) is a gaming company which focuses on delivering entertaining and responsible gaming experiences for players across channels. The company carries out operations through 3 segments i.e., Global Lottery, Global Gaming, and Digital & Betting.
The company’s subsidiary, IGT Global Services Limited, extended its contract with Société de la Loterie de la Suisse Romande until 2031.
International Game Technology PLC (NYSE:IGT) has posted its results for the third quarter of 2022. Its consolidated revenue came in at $1.06 billion, exhibiting 14% growth at constant currency. This growth stemmed from contributions which were seen from each segment including more than 30% improvement in Global Gaming.
The company’s adjusted EBITDA was $402 million principally due to strong Global Lottery profitability and healthy increase from Global Gaming. Its net debt leverage improved to 3.1x. This is the lowest level in its history. For the full year of 2022, the company expects revenue in the range of $4.1 billion – $4.2 billion, and operating income margin of 20% – 22%.
As of Q3 2022, 29 of the 920 hedge funds tracked by Insider Monkey held shares of International Game Technology PLC (NYSE:IGT), worth $156.7 million.
Palm Harbour Capital, an investment management firm, released its third-quarter 2022 investor letter, and mentioned International Game Technology PLC (NYSE:IGT). Here is what the fund has to say:
“The fifth largest detractor was International Game Technology, a world leading operator of lotteries and gaming machines, which we introduced in our first quarter 2020 letter. The share price decreased by 8.3% losing 36 basis points for the fund. Management tightened full year guidance to reflect currency movements and reconfirmed operating income margin as fundamentals remain strong.
IGT also announced a $270 million settlement related to Double Down Interactive which was higher than the $150 million which company set aside during the second quarter 2022. Despite foreign exchange headwinds from the weaker euro, we are optimistic that they will continue to delever and pay higher shareholder remuneration in the coming quarters as we believe the lottery business will remain robust even factoring in a recession.”
8. Melco Resorts & Entertainment Limited (NASDAQ:MLCO)
No. of Hedge Fund Holders: 30
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) develops, owns, and operates casino gaming and integrated resort facilities in Asia and Europe.
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) announced further details about ten-year concession to operate games of fortune and chance in casinos in Macau granted to Melco Resorts (Macau) Limited. Under the concession, Melco Resorts (Macau) Limited is authorised to operate the Altira Casino, the City of Dreams Casino and the Studio City Casino. Apart from these, it has been granted permission to operate the Grand Dragon Casino and the Mocha Clubs.
In Q3 2022, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) saw total operating revenues of US$241.8 million, exhibiting approximately 46% decline from US$446.4 million in Q3 2021. This fall was principally led by government-mandated temporary closure of its casinos in Macau and restrictions in Macau and mainland China.
As on September 30, 2022, total cash and bank balances came in at US$1.57 billion. This includes US$51.1 million of restricted cash. Total debt was US$7.73 billion at the end of Q3 2022. However, as of September 30, 2022, available liquidity was US$2.32 billion.
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) shares were held by 30 of the 920 hedge funds as of Q3 2022. The total hedge fund holdings were worth $343.06 million.
7. PENN Entertainment, Inc. (NASDAQ:PENN)
No. of Hedge Fund Holders: 30
PENN Entertainment, Inc. (NASDAQ:PENN) offers integrated entertainment, sports content, and casino gaming experiences. It operates video gaming terminal operations and gaming and racing properties.
PENN Entertainment, Inc. (NASDAQ:PENN) has posted its results for Q3 2022. The company’s revenues grew 7.5% year-over-year to $1.6 billion, while net income came at $123.2 million. The company’s strong retail results stemmed from ongoing database growth and sound margin performance.
During Q3 2022, the company repurchased 5,348,809 shares of its common stock for $168.0 million. This transaction was done at the average price of $31.40 per share. The company expects its 2022 revenue in the range of $6.15 billion to $6.55 billion and adjusted EBITDAR of between $1.875 billion to $2.00 billion.
JPMorgan Chase & Co. initiated a coverage on PENN Entertainment, Inc. (NASDAQ:PENN), and downgraded its shares from “Overweight” to “Neutral” rating. It has lifted the price objective from $38.00 to $39.00 on November 28.
At the end of Q3 2022, PENN Entertainment, Inc. (NASDAQ:PENN) was a part of 30 investors’ portfolios that held stakes worth $423.8 million in the company.
Baron Funds, an investment management company, has released its third quarter 2022 investor letter and mentioned PENN Entertainment, Inc. (NASDAQ:PENN). Here is what the fund has to say:
“Shares of gaming company PENN Entertainment, Inc. (NASDAQ:PENN) declined 9.6% in the quarter and penalized performance by 10 bps. This was due to investor concerns that a potential recession would result in a slowdown or decline in its earnings growth rate. However, thus far, the company has seen no material change to visitation or spending levels, and its earnings remain strong. PENN is generating strong cash flow, which it continues to use to invest in its digital growth opportunity, while using excess cash to buy back its stock. PENN is well positioned to weather a slowdown or recession, and we believe that even if one does occur, the company would still generate revenue and EBITDA above pre-pandemic levels. We consider the $50 million of losses this year from its digital business to be modest in relation to PENN’s over $1 billion of EBITDA from its casino business. The losses from its digital business represent customer acquisition costs incurred as additional states legalize online gambling. Since it is far less expensive to retain existing customers than to acquire new ones, we expect marketing costs to decline as PENN builds its customer base. PENN’s core bricks and mortar casino business remains strong, and the company’s healthy regional casino business and strong balance sheet enable it to absorb its digital losses.”
6. VICI Properties Inc. (NYSE:VICI)
No. of Hedge Fund Holders: 33
VICI Properties Inc. (NYSE:VICI) is a real estate investment trust based in the US. The company owns, acquires, and develops real estate assets across hospitality, gaming, entertainment and leisure destinations.
Blackstone Real Estate Income Trust, Inc. and VICI Properties Inc. (NYSE:VICI) announced about entering into a definitive agreement. As per the agreement, VICI Properties Inc. (NYSE:VICI), which currently owns 50.1% interest in the JV owning MGM Grand Las Vegas and Mandalay Bay Resort, will acquire Blackstone Real Estate Income Trust, Inc.’s 49.9% interest for cash consideration of approximately $1.27 billion and its assumption of Blackstone Real Estate Income Trust, Inc.’s pro-rata share of existing property-level debt.
In Q3 2022, VICI Properties Inc. (NYSE:VICI) saw total revenues coming at $751.5 million, exhibiting 100.0% growth against $375.7 million in Q3 2021. This growth principally stemmed from incremental revenue from the acquisitions of MGM Growth Properties LLC and land and real estate assets of the Venetian Resort Las Vegas.
The company expects AFFO for FY 2022 of between $1,682.0 million – $1,692.0 million, or between $1.91 and $1.92 per diluted common share.
As of Q3 2022, 33 hedge funds in the database of Insider Monkey held stakes worth $307.8 million in VICI Properties Inc. (NYSE:VICI), up from 26 in previous quarter worth $287.9 million.
Alongside DraftKings Inc. (NASDAQ:DKNG), Boyd Gaming Corporation (NYSE:BYD), and Las Vegas Sands Corp. (NYSE:LVS), VICI Properties Inc. (NYSE:VICI) is one of the 11 best Las Vegas stocks to buy now.
Analysts at JPMorgan Chase & Co. covered the shares of VICI Properties Inc. (NYSE:VICI), and upped their price objective from $35.00 to $36.00. They gave an “Overweight” rating on October 24.
Meridian Funds, managed by ArrowMark Partners, published its second quarter 2022 investor letter and included VICI Properties Inc. (NYSE:VICI). Here is what the fund stated:
“VICI Properties Inc. (NYSE:VICI) is a real estate investment trust company specializing in casinos and other entertainment properties. We invested in VICI in 2018 when earnings were declining due to dilutive acquisitions. Our thesis was that, as investors grew more comfortable with casinos as a REIT subsector, the value of their properties would increase. We also liked the defensive characteristics of the company, specifically the triple-net lease structure, which dictates that lessees pay all maintenance and capital expenditures, and the history of casino REITs with zero rent payments missed by casinos during either the global financial crisis or the 2020 pandemic. Furthermore, we were confident that VICI’s growth prospects would increase as more casinos monetized land holdings with VICI’s ability to use its extensive cash and liquidity to make acquisitions. VICI’s stock outperformed in the quarter due to its appeal as a fairly defensive investment and the news that it would be included in the S&P 500 Index. We maintained our position in VICI.”
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Disclosure: None. 11 Best Las Vegas Stocks to Buy Now is originally published on Insider Monkey.
