Daily Stock Pick: October 14th, 2021

This morning, Wall Street sentiment was optimistic, with big banks Bank of America, Morgan Stanley, and Wells Fargo reporting better than expected Q3 earnings before the bell.  Share price rose for the three banking giants in pre-market trading.   

Stocks tied to the economic recovery were also up this morning as the 7-day moving average for new infections fell to 86,181.  According to the latest CDC figures, the average number of new cases at the peak of the most recent wave (in early September) was more than 161,000. 

The most recent wave gave investors a legitimate sense of trepidation and consequently tore down some stocks before they even got off the ground.  As is most often the case, bargain hunters are stepping in, looking for deals among beaten-down stocks.  In today’s stock pick we’ll discuss one such stock.   

   



Casino stocks got slammed in Q1 2020 as the world shut down.  The Vegas Strip became a virtual ghost town as travel was halted.  No one knew what the future would hold, so these stocks sank lower and lower.  However, one year later, the U.S. is ready to get back into action.  Occupancy rates are jumping in Las Vegas, even nearing capacity for a few hotels on weekends. Analysts expect more than 100% revenue growth this year for Wynn Resorts Ltd. (WYNN) and nearly 46% growth in 2022.  

Nevertheless, the consensus expectation is that Wynn won’t return to full-year profitability until next year.  But if the reopening regains its strength, Wynn and other Casinos are going to have a big tailwind to work with.  

Wynn Resorts Ltd. (WYNN) owns and operates resorts and casinos in Nevada and Macau.  The company holds more Forbes Travel Guide Five Stars than any other independent hotel company in the world. 

In September, WYNN stock took a hit after the Chinese government announced plans to revise gambling regulations in Macau just days after the local government canceled public holiday events due to rising Covid cases.  WYNN’s Macau exposure does make the stock vulnerable to near-term ups and downs, but the stock bled 25% over the course of 2 weeks before the bargain hunters stepped in.  Holiday festivities are expected to return to Macau in February 2022.   

WYNN is down 35% from pre-pandemic levels and is 13% lower for the year.  It could be a bumpy road, but for long-term-minded investors, it’s hard to see WYNN as anything other than an opportunistic bargain considering the U.S. seems ready to snap back into action, and Macau looks forward to coming back online. The current consensus among 15 polled analysts is to Hold Wynn stock.  A 12-month median price target of $106.50 represents an increase of 15% from the current price. 

Where to invest $1,000 right now...

Before you consider buying WYNN, you'll want to see this.

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And it's not WYNN.

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