We’re buying more of this casino stock with Macao back on track and Vegas on fire
Shortly after the opening bell, we’ll be buying 125 shares of Wynn Resorts at roughly $102.85 each. Following Thursday’s trade, Jim Cramer’s Charitable Trust will own 500 shares of WYNN, increasing its weighting to 1.55% from 1.17%. Wynn Resorts was trading about 3% higher in the premarket in reaction to Wednesday evening’s stronger-than-expected fourth quarter. We’re buying into this early strength because we think it should be trading up even more. The quarter was fantastic . Las Vegas crushed it with a record in sales and profit, surpassing levels from the strong 2022. The F1 race, back in November, provided a big lift as we expected. But in truth, profitability was robust throughout the quarter, leading to records in October, November, and December. This week should be another record one for Vegas with the Super Bowl there on Sunday and the whole month of February should be great thanks to strength in groups and conventions. The Chinese New Year is also this weekend. In Macao, we were pleased to see the recovery get back on track, with momentum building from the third quarter that at first looked disappointing. But we had faith that management would get it together. And, what’s even more impressive is that the region is running at a higher margin than 2019 levels, thanks to a favorable shift to mass gaming and strong cost controls. WYNN 1Y mountain Wynn Resorts 1 year On top of it all, management said it’s considering increasing its regular quarterly dividend of 25 cents per share. The company’s capital positioning continues to improve, as indicated by the step-up in buybacks to about $140 million in the fourth quarter versus $56 million in the third. Stifel raised its price target on Wynn to $135 per share from $133, pointing out that shares currently trade under 10 times their forward EBITDA (earnings before interest, taxes, depreciation, and amortization). This is a discount to its historical multiples, and we think this gap should narrow because the company is stronger and diversified, with Vegas on fire, higher margins in Macao, and a project underway in United Arab Emirates (UAE). Wynn shares traded in the $120s before Covid, and we continue to think the stock can get back to those levels as the recovery in Macao continues. We’re reiterating our Club $125 per share price target and our buy-equivalent 1 rating . (Jim Cramer’s Charitable Trust is long WYNN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Read the full article here