3 Casino Stocks Poised for a Comeback

In 2018, Macau's gaming revenue grew by 14%, yet casino stocks linked to this major Chinese gaming hub struggled to capture investor enthusiasm. This was largely due to concerns over China's slowing economic growth, stricter regulations limiting table counts and banning smoking, as well as rising competition from neighboring gaming destinations like Singapore, South Korea, and the Philippines.

However, infrastructure advancements such as a new bridge connecting Macau with Hong Kong and Zhuhai are expected to boost visitor traffic. Additionally, casinos in Macau are expanding beyond gambling by enhancing their entertainment offerings—introducing more dining options and shopping experiences—to attract families and diversify revenue streams.

Boris Schlossberg, Managing Director of FX Strategy at BK Asset Management, noted on CNBC's "Trading Nation" that Macau's revenue is heavily reliant on gambling, lagging behind Las Vegas's broader entertainment and dining income. This gap indicates potential growth as Macau evolves. Furthermore, a potential trade agreement between the U.S. and China could provide additional support for casino stocks to rally in 2019.

Investors looking to capitalize on this sector should consider these three key casino stocks showing promising signs of recovery.

Wynn Resorts, Limited (WYNN)

Wynn Resorts, with a market cap of $11.90 billion, operates luxury casino resorts including Wynn Macau, Encore Macau, Wynn Las Vegas, and Encore Las Vegas. Approximately 70% of its earnings come from Macau, with the remaining 30% generated in Las Vegas. The stock offers a 2.74% dividend yield and started 2019 strong, up 10.68% year-to-date as of January 8.

Technical analysis reveals a double bottom pattern forming on Wynn’s chart, suggesting a potential upward price reversal. A bullish divergence between the stock price and the relative strength index (RSI) further supports this trend change. If the price breaks above the $120 neckline, traders may see gains pushing towards the $140 resistance level.

Las Vegas Sands Corp. (LVS)

Las Vegas Sands, with a market capitalization of $43.46 billion, owns integrated resorts featuring casinos, hotels, entertainment venues, and dining. Founded 31 years ago, 90% of its earnings come from Asia, with 30% of revenue derived from casino operations. Trading at $55.47, LVS offers an attractive 5.41% dividend yield and has gained 6.57% year-to-date as of January 8, outperforming the S&P 500 by nearly 5%.

After a volatile 2018, LVS’s share price formed a bullish divergence with RSI and began climbing from late December, coinciding with a historic one-day gain in the Dow Jones Industrial Average. The stock appears to be forming a double bottom, with potential to accelerate upward if it breaks above the $57.50 neckline.

Eldorado Resorts, Inc. (ERI)

Based in Reno, Nevada, Eldorado Resorts operates gaming and hospitality venues across several U.S. states, including Nevada, Ohio, Pennsylvania, Colorado, and Florida. Notable properties include Eldorado Resort Casino Reno, Silver Legacy Resort Casino, and Circus Circus Reno. With a market cap of $3.16 billion, Eldorado generates all its revenue domestically, appealing to investors seeking exposure to U.S.-based casino stocks without Chinese market risk. As of January 8, 2019, ERI has delivered nearly 13% year-to-date returns, the strongest among the three.

Buying opportunities arose during dips in early 2018, though the stock faced pressure amid broader market weakness in October and has since traded within a range. A breakout above the $46 resistance level could trigger a rally testing prior highs near $50.

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