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Here's Why MGM Resorts, Wynn Resorts, and Other Casino Stocks Are Rising Today

By Matthew Frankel, CFP® – Aug 6, 2020 at 3:56PM

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Gaming stocks are significantly outperforming the market.

What happened

The stock market is seeing modest gains today, with most major indexes up less than 1% as of 3:20 p.m. EDT. However, large casino operators are outperforming the broader market, and by a wide margin. MGM Resorts (MGM 1.74%) is higher by 10%, Wynn Resorts (WYNN 1.73%) is up by 7.5%, and Las Vegas Sands (LVS 2.50%) has gained more than 4%.

So what

There are a couple of potential catalysts fueling today's moves higher.

Hand placing chips on a gaming table.

Image source: Getty Images.

First, fellow gaming stock Penn National Gaming (PENN -1.02%) reported second-quarter results that seemed to give investors hope for the future. While revenue declined dramatically in the second quarter, Penn's management gave positive comments in regards to demand going forward, and this optimism seems to be helping to boost the entire industry.

Second, Macau's Secretary for Security hinted that there could be "good news" on the border opening between Macau (where all three of these companies have casinos) and mainland China. The short version of the story is that Macau casinos have been open for months, but because of restrictive quarantine protocols for travelers, they have had virtually no business. While there's nothing certain yet, an easing of the restrictions could be game-changing news for the Macau gaming industry.

Now what

Casinos remain some of the most beaten-down cyclical stocks of the COVID-19 era, but today's developments seem to be giving gaming investors hope that there's light at the end of the tunnel.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Wynn Resorts, Stock Quote
Wynn Resorts,
$86.43 (1.73%) $1.47
Mgm Resorts International Stock Quote
Mgm Resorts International
$37.01 (1.74%) $0.63
Las Vegas Sands Stock Quote
Las Vegas Sands
$48.31 (2.50%) $1.18
Penn Entertainment Stock Quote
Penn Entertainment
$32.95 (-1.02%) $0.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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