Top 5 Casino Stocks to Invest In

Following identifying probably the most popular stocks among hedge funds based on their third quarter 13F filings, we have decided to break down the top five stocks that hedge funds really like in the casino industry. The top rated casino stocks need to perform effectively over the interim as a strengthening inside the worldwide economic climate drives improved discretionary spending and corporate travel. Our list contains the countless hedge funds and prominent investors which have been required by the SEC to disclose their public equity holdings quarterly. In descending order, we have outlined the most-loved casino stocks determined by the aggregate amount of funds owning each and every.

Penn National Gaming (NASDAQ: PENN) came in because the fifth most preferred casino stock loved by hedge funds with 22 filers. Penn is up just about 30% year to date following its announcement to split the organization into two components. The proposed REIT conversion sets Penn apart from major competitors and will be the very first ever casino REIT. Penn will not currently spend a dividend, but following the split, the majority of Penn’s properties shall be placed in a REIT and operations shall be managed by yet another publicly traded enterprise. Deutsche Bank puts a sum-of-the-parts valuation on the gaming corporation at $65 – when compared to its $50 recent trading price tag. Penn’s 23x trailing P/E compared to its forward P/E of 17x suggests that investors nevertheless could possibly be overlooking the casino’s future potential.

MGM Resorts International (NYSE: MGM) had 23 filers owning the corporation in the end of 3Q to are available in fourth. MGM derives the majority of its revenue from its Las Vegas properties – accounting for 60% of revenue in 2011. Revenues are expected to be up 17% in 2012, helped from the very first complete year of its China operations. MGM has also undertaken initiatives to remodel numerous of its MGM Grand and Bellagio rooms, which ought to enable drive larger visitations within the interim. MGM is expected to post damaging full year earnings for at least the subsequent two years even though reaching just a 6% annual five-year earnings development. With all the casino stock down 5% year to date and plans for a turnaround work – not to mention expansion prospects for Macau – hedge funds may be betting MGM can pull off a turnaround faster than analysts predict. MGM is one particular of billionaire John Paulson’s prime picks; he is the major fund owner of your casino stock and has more than 3% of his 13F invested in the casino (verify out Paulson’s newest stock picks).

Wynn Resorts (NASDAQ: WYNN) has 29 filers as owners to become the third most preferred casino stock owned by hedge funds in 3Q. Revenues for 2011 were up 25%, with this casino resort operator also seeing solid development from operations in China. Wynn trades inside the midrange with the industry at 21x earnings, but showed positive trends of late with 3Q EPS coming in at $1.48 in comparison to $1.05 for 3Q 2011 and estimates of $1.26. Wynn is another casino stock which has showed commitments to returning capital to shareholders. Wynn not too long ago announced plans to pay a unique dividend of $7.50 and boosted its standard dividend yield over 100% to $1.00 per share. From a valuation standpoint, Wynn trades in line with its market peers at 21x.

Las Vegas Sands (NYSE: LVS) came in at second with 31 filers. Again, Las Vegas Sands expects its development to become driven by solid performance in Macau. Las Vegas Sands pays a 2.1% dividend yield, that’s 1 from the highest in the business. Las Vegas has also created current initiatives to return capital to shareholders and may possibly be the next gaming stock to explore the REIT structure. Las Vegas Sands not too long ago announced a $2.75 particular dividend. This comes immediately after the gaming stock upped its standard dividend to $1.40 annually. Revenues are expected to be up 19% in 2012 ahead of reaching double-digit development in 2013 also. Additionally to its major dividend position, Las Vegas has strong prospects within the Singapore market place – a restricted competition and high margin industry – with its Marina Bay Sands resort. Billionaire investor and founder of Citadel Investment Group Ken Griffin was one on the firms loving Las Vegas final quarter; he upped his stake more than 50% (see Ken Griffin’s newest picks).

Melco Crown Entertainment (NASDAQ: MPEL) came in because the leading casino stock with 32 filers – immediately after a net improve of 11 filers – the biggest of our 5 stocks. Provided the expected revenue drivers with the other 4 casino stocks, which are expected to view the majority of interim revenues driven by Macau properties, it really is simple to see why Melco is number 1. Melco operates primarily in the Macau area, where casinos are expected to outperform other regions including Las Vegas offered their greater exposure to increasing discretionary earnings, which in turn, will spur larger visitation rates. Macanese gaming revenues were up over 40% in 2011 and should really continue to accelerate inside the future. This ought to help drive Melco’s business leading five-year expected EPS growth rate of 36% annually. Melco was one of Moore Capital and its billionaire founder Louis Bacon’s bullish bets throughout the third quarter.

We believe that investors could be capable to obtain significant value in casino stocks as an increase in discretionary spending drives the business larger, and also the potential for unlocking shareholder worth becomes evident with achievable REIT conversions.

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