With the Market Vectors Gaming ETF (BJK) up 12.5% in just the past month, some traders might be apt to think that it is too late to get involved with this exchange traded fund and casino stocks. However, there are other points of view.
Consumer discretionary is one of just four sectors expected to post positive earnings growth this year. S&P Capital IQ currently holds a market Overweight rating on the consumer discretionary, health care and telecommunication services S&P sectors.
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Regarding casino stocks, including some BJK holdings, some of the “biggest names in the business have seen their stocks surge in the past month or so. Las Vegas Sands (LVS) has rallied around 6 percent this week so far since reporting earnings Monday, and rival Wynn Resorts (WYNN), which has yet to release earnings, has also surged 46 percent year to date. Rounding out the international names is Melco Crown (MPEL), which looks to be recovering with a 10 percent rise this quarter alone,” according to CNBC.
Some industry analysts see opportunity with Macau stocks. Macau, the only Chinese territory where gambling is legal, is the world’s largest gambling hub. The city is trying to rebuild its market with shops, restaurants, entertainment shows and other non-gaming attractions to bring in more middle-class tourism. For instance, Galaxy Macau is planning a Broadway.
Junket operators, who account for two-thirds of betting in Macau, lend to Chinese players who are limited on how much money they can bring over from the mainland, and the operators collect gambling debt.
“A report released by Stifel Nicolaus on Monday evening suggested that investors may want to be careful before betting on the casinos. The report gave a price target of $56 for Las Vegas Sands and a generally positive outlook for the casino giant. But it also mentions that investors should watch for a recovery in the casino business and wait to see how the industry reacts to new openings,” according to CNBC.
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Market Vectors Gaming ETF