Citi Research Reveals Top Gaming Stocks for 2024
Consumer cyclicals, which are stocks highly dependent on economic conditions and business cycles, encompass a variety of industries including retail, housing, automotive, and entertainment. This designation also includes major gambling operators.
In a recent report released by Citi Research, two leading gaming and entertainment operators, MGM Resorts International and Las Vegas Sands, were highlighted as top choices for consumer discretionary stock ideas for the upcoming year. Despite concerns about the resilience of casino stocks, Citi included these two companies based on their anticipated fundamental resilience and strong expectations for cash flow, earnings, margins, and sales in 2024.
Specifically, Citi positioned Las Vegas Sands as the third top consumer cyclical idea for 2024, with an expected return of 54%. Meanwhile, MGM made it to fourth place on the list, with an anticipated total return of 44% in 2024.
The report also addressed the ongoing senior leadership change at Entain, a global gaming company, with analyst James Wheatcroft suggesting the possibility of the company considering a full or partial sale or sale of assets to MGM, following the departure of Entain’s CEO, Jette Nygaard-Andersen.
In addition to MGM and Las Vegas Sands, Barclays analyst Brandt Montour highlighted PENN Entertainment as his favorite gaming stock for 2024, citing the company’s early success with the recent launch of ESPN Bet, which entered 17 US states in mid-November. Montour also favored Caesars Entertainment as another stock pick for 2024, noting its underappreciated deleveraging and strong free cash flow.
Overall, the report from Citi Research and insights from industry experts suggest that gaming and entertainment companies, including major operators like MGM, Las Vegas Sands, PENN Entertainment, and Caesars Entertainment, are poised to be profitable investments in 2024. Investors and analysts alike are optimistic about the potential for growth and resilience within the gaming sector in the year ahead.