馃攳
PENN, MGM, CZR, DKNG: Gaming Stocks To Watch - YouTube
Channel: TD Ameritrade Network
[0]
it's time to talk casinos and gaming in
[2]
our 360 round joining us right now chad
[4]
bainen
[6]
managing director for gaming lodging and
[7]
theaters at macquarie group and david
[10]
katz managing director for gaming
[12]
lodging and leisure equity research at
[14]
jeffries thank you both for being with
[16]
us so
[18]
i'll start with you chad i saw a lot of
[20]
upside potential a lot of buys even 100
[23]
possibility for upside tell me why you
[26]
feel so positive on the group
[29]
sure thanks nicole um yeah i'd say on
[31]
the on the land-based side kind of the
[33]
the bricks of the of the business you
[35]
know we've seen really strong consumer
[36]
trends uh for almost about a year some
[39]
of that is reflected in the stocks um
[41]
companies that are more purely related
[44]
to this side of the business are up 80
[46]
percent since covid so over a two year
[48]
basis uh the stocks that have uh really
[51]
suffered more are the ones that are more
[53]
exposed towards mobile gaming and sports
[55]
betting those are the ones where we have
[57]
a higher upside within our coverage
[59]
universe uh penn national we have 70
[62]
upside mgm and caesar's 50
[65]
but draftkings we are still sticking
[67]
with this one that's the one with the
[69]
most upside at 100 percent
[72]
yeah i saw that i couldn't believe it
[74]
and you had a smaller one that i want to
[76]
get to where you also had a hundred
[78]
percent upside david you're in agreement
[80]
that the consumer is
[82]
remaining strong and now wants to get
[84]
back out there you may have some
[86]
concerns i see
[88]
macau for example you said is somewhat
[89]
subdued what are your what's your
[91]
outlook for this group
[93]
yeah i think you do have to take it in
[95]
parts to pull uh the the regional casino
[98]
stocks
[100]
where you know patrons live within an
[102]
hour's drive the questions we've been
[104]
getting from investors is whether fuel
[106]
prices
[107]
are a concern whether a low-end consumer
[110]
bear case is a concern
[112]
we are not particularly concerned we are
[114]
bullish on those regional casino players
[117]
we know that those revenues through many
[120]
years over the past 20
[122]
great financial crisis they have
[125]
usually been tethered to wage growth and
[127]
we are seeing wage growth in the economy
[129]
today and so we're comfortable with
[131]
those regional casinos las vegas is
[134]
another segment which is doing well as
[136]
group business returns
[138]
and conventions return and entertainment
[141]
returns and so we feel comfortable there
[143]
as well macau is really a challenge
[147]
and notwithstanding the zero tolerance
[149]
policy that china has imposed
[152]
we still expect that consumer to roll
[155]
back very slowly and some portion of it
[158]
the vip business has been in secular
[161]
decline for years and is practically
[163]
shut down and we think you know
[165]
permanently at this point so that's a
[167]
much more complicated recovery
[170]
oh okay so it really is a bit of a pick
[173]
and choose here um chad just to
[175]
elaborate here on the names that you
[177]
liked most you had 50 percent upside for
[180]
caesar's 70 upside for um um
[184]
international game check as well as pen
[186]
and then a hundred percent for
[187]
draftkings and play ads so tell me a
[190]
little bit about the uh the small cap
[193]
here because i'm not sure that everybody
[195]
even is fully familiar with that name
[198]
sure um yeah i guess within our small
[200]
cap universe we cover a number that are
[202]
growth stocks and then just kind of
[203]
recovery type of type of names the one
[206]
that you mentioned is play ags
[208]
they're a pure play on the recovery of
[210]
the slot business
[213]
visitation for casinos both in vegas and
[216]
in the regional markets
[218]
we're back to about 80 percent of
[220]
prior levels but spend per visitor is up
[224]
30 to 40 percent what we haven't seen is
[228]
that 65 year old and an older
[230]
demographic come back we think we're
[233]
starting to see that
[234]
we think we're seeing a little bit of
[235]
that in march and that'll kind of
[237]
continue as the weather warms up here um
[240]
so we do like names that are uh
[243]
that are that are driven off of that
[245]
consumer coming back and one of the
[247]
names is play ags it's a small cap slot
[250]
name uh that trades under seven times
[253]
ebitda and prior to covid it was trading
[255]
close to 10 times evda so it's really a
[258]
value recovery name in our view
[261]
right and david what's what's your
[263]
favorite
[264]
in the group then because you made it
[267]
very clear right you have to pick and
[268]
choose here because it's not just a
[270]
broad brush for this group i mean what
[272]
would be some of your more favorite
[274]
names in the group
[276]
yeah
[277]
nicole what i would what i would point
[279]
you to is our context for how we're
[281]
picking stocks because the recovery and
[284]
this has been an incredibly complex
[286]
market right but the recovery is
[288]
underway it's happening we need three or
[291]
four reasons beyond just recovery in
[293]
order to select a stock as a favorite
[296]
we're choosing caesar's it's actually on
[298]
jeffrey's franchise pick list
[300]
which is about 25 stocks across our
[302]
whole platform because we think there
[304]
are multiple reasons for it to work
[307]
you know beyond just vegas recovery and
[310]
regional gaming recovery both of which
[312]
is where they play
[313]
there is an asset sale on the vegas
[316]
strip that is forthcoming
[318]
there is a digital business that as chad
[320]
pointed out earlier is currently a
[322]
negative that we believe is going to
[324]
pivot pivot to a positive they have a
[327]
number of other growth areas
[329]
a project in pompano florida and a
[332]
number of other areas where the ebitda
[334]
and the cash flows of the business are
[336]
going to grow in the next few years and
[338]
so caesars has multiple ways to win
[341]
which is important for us
[344]
right right and chad i'll give you the
[345]
final thoughts because i think a lot of
[347]
people obviously you had more people
[349]
getting into gaming without a doubt
[351]
during
[353]
covid are you thinking that's probably
[355]
going to continue
[357]
from an investment standpoint i think we
[359]
saw a few new types of investors we saw
[362]
the retail camp
[363]
that that slowly moved into names such
[365]
as draftkings and some of these other
[367]
names um they may have also been
[369]
participating in the product themselves
[371]
um and then the
[373]
you know really the other group is is
[375]
kind of a growthier software type
[377]
investor
[378]
and i think that kind of came and went i
[380]
think that will come back that'll help
[382]
help the names like draftkings and also
[385]
mgm and caesars that are exposed to this
[388]
high-growth multi-year uh sports betting
[391]
business that we're really bullish on
[393]
yeah without a doubt thank you both very
[396]
much what a great conversation i
[397]
appreciate it chad bannon macquarie
[400]
david katz of jeffries thank you both
[403]
very very much for being with us
[425]
you
Most Recent Videos:
You can go back to the homepage right here: Homepage