What Happens in Macau, Stays in Your Wallet
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
It’s not gambling if you Wynn (NASDAQ: WYNN). I apologize, that was brutal. If the eleven of you that read this happen to be considering a potential position with casino stocks, Wynn Resorts, Ltd. is your best bet. Still no good?
I don’t personally have a stake in Wynn, or its peers, Las Vegas Sands (NYSE: LVS) and MGM Resorts (NYSE: MGM). But when I look at these three stocks for a potential jackpot (ouch), Wynn stands out above the others.
Here’s the boring part, please bear with me. Wynn trades in a 52-week range of $101-$172. It offers loyal shareholders an ample 1.8% dividend yield. I think by now it’s obvious that I have a thin slice of respect for companies that reward their investors with a quarterly “bonus.” Looking at the past three months, Wynn looks poised to take a run closer to the $130-$140 range where it was last October. It currently trades around $116.
MGM has been bouncing around a 52-week range of $7-$16, and rewards shareholders with no dividend. MGM also has much less exposure in the Macau region, which I hear is very nice this time of year. MGM currently trades around $13 a share and I am anxious to listen in on their earnings call next month (the 16th), to get updates on how that shiny new resort they are building in Macau is coming along. Perhaps a little late in the game, so to speak. For the same three-month span, MGM is at the top of that range, currently. With less exposure in the Macau region, thus more dependent on our zero-growth economy, let’s just say I am not a fan.
What about Las Vegas Sands, you ask? LVS has been trading in a $36-$50 52-week range and currently trades closer to the top end of that number at $46 a share. Look Ma, no dividend, either. LVS has a more impactful footprint in the Macau region relative to MGM. Looking at the past three month’s performance, it too is creeping ever closer to the $48 highs from last October.
So for those of you that like to play the odds, if this were a horse race, Wynn would be the 3-1 favorite over LVS at 8-1 and MGM third-best at 20-1. If you prefer Texas Hold ‘Em (personally, I’m fine with either), Wynn has pocket Queens, LVS has J-10 suited, and MGM has the dreaded, unsuited 3-8.
I think Wynn has more room to run than the others, and I like their current position in Macau. I think MGM’s reliance on domestic revenues (currently around 60%) is reason to raise a concerned eyebrow (or two, or the uni-brow, depending on your tweezing habits). LVS trades below fair value, so there’s that, but nothing in life is “fair.”
Until next time, from the trading table,
The Motley Fool has no positions in the stocks mentioned above. kmet312 has no positions in the stocks mentioned above, but takes requests for Poker Night very seriously. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.