1) MGM Resorts International (NYSE:MGM)
Average Upside Potential: 41.34%
Forward P/E as of September 27: 13.16x
Number of Hedge Fund Holdings: 44
MGM Resorts International (NYSE:MGM) owns and operates casino, hotel, and entertainment resorts in the US and internationally.
Wall Street analysts continue to be optimistic about MGM Resorts International (NYSE:MGM)’s growth prospects after China’s stimulus to boost its economy. The initiatives announced are anticipated to improve the business of casinos, which means there will be increased demand for travel-related services.
The company’s online platform, BetMGM, turned a profit, mainly due to its iGaming business. Additionally, MGM Resorts International (NYSE:MGM) announced plans for significant investments in luxury resorts on the Las Vegas strip and digital businesses, targeting mid-teens FCF per share growth through 2028. BetMGM expects a rise in revenue for the latter half of this year and continuing into 2025. The company has been successful in surpassing targets in both customer acquisition and retention, which should translate into increased YoY revenue.
Wall Street analysts expect upward revisions of estimates for MGM Resorts International (NYSE:MGM) as a result of performance in Las Vegas and China and they anticipate healthy capital returns.
In Q2 2024, the company’s consolidated net revenues came in at $4.3 billion, reflecting an increase of 10% compared to the prior-year quarter. This growth was mainly because of an improvement in revenue at MGM China as a result of the continued ramp-up of operations post the removal of COVID-19-related entry restrictions in Macau in Q1 2023.
Analysts at Susquehanna upped their target price on the shares of MGM Resorts International (NYSE:MGM) from $54.00 to $55.00, giving a “Positive” rating on 1st August.
Longleaf Partners, managed by Southeastern Asset Management, released its fourth quarter 2023 investor letter. Here is what the fund said:
“MGM Resorts International (NYSE:MGM) & Hyatt – Hospitality companies MGM Resorts and Hyatt were both strong performers in the fourth quarter and for the year, outperforming expectations that the post-COVID travel rebound would ease in 2023. Casino and online gaming company MGM saw double-digit revenue growth and strong 2023 bookings in Las Vegas in the first half, which moderated in the second half but remained solid. A cybersecurity attack negatively impacted 3Q results, but MGM does not expect the $100 million hit to have a material effect on its financial condition and operational results for the year. MGM bought back discounted shares at a 15% annualized rate and authorized another $2 billion buyback in 4Q, which represents another 15% of the company.”
While we acknowledge the potential of MGM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than MGM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
