MGM Resorts (MGM -0.37%) stock has made a relatively swift recovery from the depths of the pandemic, when shares fell below $10. The company is still losing money on a big drop in revenue, but operations are starting to come back, led by Las Vegas. And when Macao hits its stride we could see this become a cash flow machine again. 

The question for investors now is whether or not the upside potential is worth the risk. Right now I think it is -- and this could indeed be a millionaire maker stock. 

Las Vegas skyline at dusk.

Image source: Getty Images.

MGM Resorts' core

MGM Resorts has two primary business segments today: North American resorts and MGM China, which consists of two resorts in Macao. 

MGM is one of the biggest property owners on the Las Vegas Strip, but it operates regional casinos all over the country. In the fourth quarter Las Vegas Strip revenue was down 66% versus a year ago to $480 million, but regional casino revenue was down just 34% to $595 million. Adjusted property EBITDAR on the Las Vegas Strip was down 86% to $54 million, while regional casinos saw a drop of 30% to $159 million.

Right now, regional casinos are a huge point of strength and an under-appreciated part of the business. But you can see that all resort and casino revenue is down because of the pandemic. However, if the vaccine roll-out continues and case numbers continue to fall, there could be a sharp rebound later this year and in 2022. 

In Macao, MGM Resorts owns a 56% stake in MGM China, and operates two resorts known as MGM Macau and MGM Cotai. The properties had an EBITDAR run rate of nearly $750 million as recently as the final quarter of 2019, but generated just $41 million in EBITDAR in the fourth quarter of 2020. Long-term this should be a highly profitable segment of the business, but restrictions on travel in Asia hampered results dramatically last year. 

MGM's new growth business

The latest addition to MGM's operations is a relatively new online gambling business, a 50/50 partnership with Entain known as BetMGM. In 2020, BetMGM generated $178 million in net revenue and posted a $62 million operating loss. But the company is growing quickly, with MGM expecting net revenue to more than double in 2021. If MGM is going to be a growth stock, it'll be BetMGM that gets it there.

While the pandemic was certainly a driver of online betting growth, the market is still relatively new. BetMGM was only operational in nine states by the end of 2020, and only about one-quarter of the country has legalized online sports betting or i-gaming. That leaves a huge untapped market for MGM to grow into long-term. Eventually, online gambling could be more profitable than any casino in Las Vegas or Macao. 

Built to last

MGM operates in some great markets and is on the road to recovery in the U.S. In the meantime, it has one of the best balance sheets in the gambling industry, with just $7.4 billion of net debt. If the company can return its resorts and casinos to the $3.02 billion of EBITDAR generated in 2019 and add BetMGM's growth to that, this could be both a value and growth stock. 

The casino industry has been beaten up over the past year as the pandemic shut down operations and hindered travel around the world. But there's a chance demand for large entertainment facilities will explode once vaccinations reach a wide audience. Consumers and businesses are ready to get together for vacations and conventions once again, and MGM Resorts could be one of the biggest beneficiaries.