Casino stocks are among the hardest hit due to the coronavirus pandemic. For now, several casino companies have bounced hard off their lows.
Major companies like Wynn Resorts, Caesars and MGM Resorts have been able to rally and have seen a push of 140% since bottoming out on March 18th. For Penn National Gaming, they saw the best surge, with almost 780% of their low.
Oppenheimer head of technical analysis Ari Wald commented on the surge, stating that the recovery for such casino companies is not over yet.
According to Wald, typically during market turning points, you will see investors embracing those who are the most beat-up. In the S&P casinos industry, stability has been seen over the past two months. Wald says that you test the underside of that 200-day.
A Different Story For S&P Casinos
For the subgroup of S&P casinos’, they would need to come back almost 26% to reach the 200-day moving average.
While this percentage is relatively low, Wald cautions that he is not ready to back the stocks of casinos for the long term.
The analyst says that there are more long-term concerns that need to be considered. He feels the premium is going to be on the high-growth companies during the low-yielding recovery period.
Macau To Recover Sooner
In general, it appears as though Macau may see the biggest rebound. According to BK Asset Management managing director of FX strategy Boris Schlossberg, the markets are betting that Macau will see a rebound.
Las Vegas Sands dominates in this area and they are the largest operator in Macau.
In Macau, gaming revenue dropped just over 93% last month. Stocks rose through as traders were able to look beyond the drop and see signs of recovery.
According to Schlossberg, the return to Macau will be more rapid than Vegas.