One of my favorite places in the world is Las Vegas. The lights, the casinos, the action and just the general atmosphere make this city an annual destination for me.
However, Las Vegas was closed for over a year due to COVID-19 restrictions. At the height of the pandemic, we were unable to visit most of the places we love. Even if things opened up a little, the rules used to fight the virus made it not very desirable.
Then the vaccines came and the cases fell, which helped America and Vegas reopen. Tourism picked up again across the country as people began to travel again.
When it comes to Vegas, I can tell you firsthand that the city is back and more energetic than ever. I was only there a few weeks ago and from what I’ve seen the reopening is making for a spectacular boost.
I’ll share my experience and highlight some stocks that will benefit from the reopening, but let’s talk about the impact of the pandemic on the city first.
Las Vegas and COVID-19
COVID has taken its toll around the world, but the metropolitan area that was hardest hit economically was Las Vegas. If you have a city so dependent on tourism, the suffering was compounded when that aspect of the economy was shut down.
Let’s see what happened in Las Vegas last March:
March 5, 2020: First COVID case in Nevada.
March 10th: MGM Resorts closes all buffets in its hotels
March 12th: Governor Steve Sisolak declares a state of emergency
March 12th: No March Madness tournament announced
March 12th and 13th: NHL and NBA banned
March, 15: Wynn Closes (other hotels / casinos will follow within a week)
March 24th: Social restrictions arranged, no more than 10 people in a group
April 1st: Stay home ordering.
Writing that down and reliving that timeline is not easy. It was a tough time for all of us. While many of us have adapted well and been able to work from home, the reality was …
Las Vegas was closed!
The US Travel Association said the pandemic resulted in accumulated losses of $ 500 billion in Vegas alone, resulting in more than $ 60 billion in tax revenue losses. Unemployment rose to 34% and was the largest of any metropolitan area in the country, according to the Bureau of Labor Statistics.
Even after we got through the initial fearful phase and things opened up, the recovery was very slow. Congresses still weren’t back, and hotels that typically charge $ 400 a night during Consumer Electronics Show week were charging less than $ 50 that same week.
Things were very bleak, but once the pandemic got under control, things started to open up. The city announced that all restrictions would be lifted on June 1st, and I got to see it the following weekend. Vegas was back!
And not only is it open again, there is an additional element that will provide a tailwind. There has been a culture shift that has changed the odds – not just for Vegas, but for casino and gambling companies across the country.
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Willingness to take risks
Only Utah and Hawaii have a 100% gambling ban, and more than half of the states now allow sports betting. In the past decade, our culture of acceptance of gambling has changed dramatically, and the aftermath of the pandemic has accelerated this movement.
During the lockdowns, we were all stuck at home with nothing to do, and for some reason many of us decided to trade stocks. The retail sector shot through the roof as people started following the insane stock market movements that were happening. People took their stimulus checks and put them to work, creating a thirst for risk. With “stimys” in hand and funds from the Fed, that risk-taking turned into degeneration, which was evident in “meme” stocks.
That movement eventually turned to gambling when the sport returned. Companies like DraftKings and Barstool Sports flourished as every state moved to legalize sports betting. When the states opened, that risk-taking helped drive money into both the regional casinos and Vegas.
The reopening
America’s casinos were back before we fully opened, according to AGA, hitting their best quarter ever in the first three months of the year. Fixed-line casino games had a very strong March, with slot machine and table game revenues only 1% below total revenues in March 2019. Sports betting set a new quarterly record as online sports gambling continues to grow.
Nevada recently reported its casino gaming revenue in April, and it apparently saw a significant year-over-year increase. You really have to compare the numbers to 2019, and even then, sales of $ 1.04 billion were up 11%. Las Vegas Strip sales grew 0.3% over the same biennium.
And for your absurd number compared to last year, the number of gambling licenses increased by 28,255.93% from 2020 due to the limited activity.
The casino industry has recovered as leisure travelers have returned. I was one of them a few weeks ago while celebrating my birthday in Vegas for a weekend. It was 110 degrees outside so I was surprised to see the strip full of people on the sidewalks. When you went in the casino was full which made it difficult to find a seat at the blackjack table. I stayed at the Cosmopolitan, where the sports betting for the NBA playoffs was slammed.
It was a great sight, but Vegas still has some challenges ahead of it. Labor shortages, canceled conventions and a slower recovery in business travel are all standing in the way of full recovery. However, with the restrictions completely lifted, we should see improvement in these areas in the summer months.
Find the golden nugget
There are a handful of casino names focused on Las Vegas, but there are also companies that are more regional and have relocated to Macau, China. Let’s take a look at Las Vegas stocks as well as some other casino names:
BYD – Boyd Gaming operates in ten states and is valued at $ 7 billion. The company operates 29 properties and generates approximately 30% of its revenue from Vegas. The remaining revenue comes from four land-based casinos, six port riverboat casinos, and four launch-based casinos.
MGM – MGM Resorts owns and operates casino, hotel and entertainment resorts in the United States and Macau. The company is valued at $ 19 billion, and the stock is up nearly 30% year over year. The company owns properties in Macau, Las Vegas, and other regional locations. It recently ventured into the competitive online sports betting market with hot names like Penn National and DraftKings.
CZR – Caesars Entertainment is valued at $ 20 billion and is based in Reno. As one of the oldest casino names, the company operates 54 domestic properties in 16 states.
WYNN – Wynn Resorts has a market capitalization of $ 14 billion and operates in Las Vegas, Boston and Macau. The Vegas segment includes both Wynn Las Vegas and Wynn Encore and accounts for 25% of sales. Macau accounts for 60% while Boston Harbor accounts for 15%.
LVS – The biggest name by market cap is Las Vegas Sands, which has a focus in Asia following the sale of its Vegas properties. Valued at over $ 44 billion, the company owns and operates big names such as The Venetian Macau, The Plaza Macao, Sands Macao, and Marina Bay Sands.
This is how you capitalize
I plan to return to Vegas in October to watch my Chicago Bears play at the new stadium that the Las Vegas Raiders now call home. I will be very excited to see how Vegas has further recovered and where they will be in four months.
Until then, I’ll keep an eye on casino names and look for entry points into these stocks.
You can bet there will be many opportunities in these names in the future, join me and let’s take advantage of it!
As exciting as the opportunities are, Las Vegas is only part of a massive travel and tourism industry rebound.
The Airbnb CEO described this as “a boom like we haven’t seen in a century”.
The pandemic wiped nearly $ 4.5 trillion from space worldwide. Now that people are comfortable traveling again, countless millions are preparing for their first vacation in two years. The intense pent-up demand gives investors the chance to target highly lucrative trades.
To help you capitalize on the upcoming surge, Zacks just released a brand new special report titled Travel Mega-Boom: 8 Stocks for the Billion-Dollar Rebound.
It offers an analysis of eight segments of the travel industry (including casinos) ready to jump higher. It highlights the leading stocks in those segments and then picks one stock from each group that we believe will rise the most. You will be surprised by these recommendations.
I encourage you to check them out right away. But don’t hesitate. The deadline for downloading Travel Mega-Boom is Midnight Sunday June 27th midnight.
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Good investing,
Jeremy Mullin
Equity strategist
Jeremy Mullin has been a professional trader for over 15 years with specific experience profiting from patterns set by high frequency traders. He is the editor of Zack’s Counterstrike.
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