Posted on: August 1, 2022, 02:00 AM.
Last updated on: August 1, 2022, 12:47 PM.
The S&P 500 is still saddled with a 13.26% loss to date, but the domestic equity benchmark rose 8.32% in July thanks to contributions from some consumer goods, including casino stocks.
The Las Vegas Strip. Credit Suisse sees opportunities with select casino stocks. (Image: TheStreet.com)
Caesars Entertainment (NASDAQ:CZR) and Las Vegas Sands (NYSE:LVS) were among the casino stocks that rose 13.46% and 12.14% respectively in July as market participants moved back into the cyclical consumer sector. With that, Credit Suisse says new market leadership is emerging, and some of it is due to “speculative” names, including those in the gaming industry.
With commodity prices falling and economic data weakening, inflation is expected to decline steadily over the next 24 months based on both breakevens and economic forecasts,” Credit Suisse’s equity analysts wrote. “We believe this will lead the Fed to move towards a more moderate policy towards the latter part of the year, supporting a continuation of the current rally and factor leadership of the market.”
The bank defines speculative stocks as stocks with one or more of the following characteristics: high correlations with bitcoin, expensive earnings multiples, significant declines on a 52-week basis, increased volatility and significant short-term interest rates.
Caesars, Sands Tick those boxes
Based on the above criteria, Caesars and Sands both appear on a Credit Suisse list of 50 stocks with speculative properties that could lead a new market rally.
Caesars meets the high borrowing, high short-term interest and high volatility requirements while beating LVS, expensive in valuation and volatile, the bank said. With both casino stocks making double-digit gains last month, it could be dangerous for bearish traders to visit these names for short selling.
In the case of LVS, the news flow out of Macau is believed not to get much worse and data confirms that Singapore’s Marina Bay Sands (MBS) is well on track to return to pre-coronavirus pandemic levels of profitability and revenue growth.
With its US focus, Caesars is in a more delicate position regarding potential vulnerabilities to inflation and a slowdown in consumer spending. On the other hand, Nevada casinos are coming out of their best revenue period of 12 months, which makes sense for Caesars because it is the second largest operator on the Las Vegas Strip and has properties in Laughlin and Reno-Tahoe.
Other casino stocks on the list
Caesars and Sands are not the only casino stocks in the Credit Suisse speculative market. As a big name with high short-term interest rates, Penn National Gaming (NASDAQ:PENN) is also on the list.
That share rose 11% last month. Wynn Resorts (NASDAQ:WYNN) posted a 9.45% gain in July. The Wynn Macau operator appears in the Credit Suisse rankings due to massive drawdown, significant short-term interest rates and above-average volatility.
As of June 16, the best-performing of the above factors has been the high correlations with bitcoin, followed by expensive valuations and those with large declines.
This post Caesars, Penn Among Casino Stocks With Rebound Potential
was original published at “https://www.casino.org/news/caesars-penn-among-casino-stocks-with-rebound-potential/”