Goldman Sachs says Sands Corp. and Wynn Corp. are growth stocks with attractive prices
Investors looking for growth stocks trading at reasonable prices have plenty of options in the consumer discretionary space, including Las Vegas Sands (NYSE: LVS ) and Wynn Resorts (NASDAQ: WYNN).
In a recent note to clients, Goldman Sachs offered growth stocks at reasonable prices (GARP), and two casino stocks were on the list. The two stocks are the only gaming stocks mentioned in the bank's research.
"We provide an overview of growth at a reasonable price ("GARP") stocks for investors who want to extend growth at a reasonable price ("GARP") but are cautious about valuations," writes David Kostin, head of U.S. equity strategy. Goldman Sachs in report.
With just 13 trading days left in 2023, Sands shares are down 0.96% year to date while Wynn is up 4.28%, with both gaming stocks significantly underperforming the S&P 500. Goldman Sachs' thesis could provide upside for shares of both casino operators in 2024, assuming Macau's gross gaming revenue (GGR) recovery will continue to accelerate in the new year. be strengthened. Macau's Sands Group and Wynn Group jointly operate seven integrated resorts in the special administrative region.
Sands and Wynn may be too cheap to ignore
Goldman's outlook on cheap growth stocks comes as other market watchers argue that Macau-related stocks are unusually cheap and have faced overly harsh backlash.
Franchises in Macau are trading at rock-bottom valuations. As of Dec. 4, the stock prices of five of the six franchise companies, including Sands China, had fallen by at least 20% since Jan. 1, still before the SAR reopened due to strict travel restrictions imposed by the new coronavirus. One week. On a year-to-date basis (as of December 4), only MGM China is profitable, while Sands China and Wynn Macau have both suffered heavy losses year-to-date.
Market participants' treatment of Sands and Wynn shares this year has been inconsistent with their expectations that next year will deliver better profits and sales. Goldman Sachs estimates that the median stock in its GARP screen, which includes two gaming stocks, will boost earnings by 13% next year, compared with 8% for the median S&P 500 index member.
Outside of Macau, Singapore's lucrative Marina Bay Sands hotel remains a growth engine for LVS, while Wynn's Las Vegas hotels and Encore Boston Harbor also posted record quarterly results this year.
Sands, Wynn provide catalysts for 2024
The data confirms that Sands and Wynn stocks exhibit value characteristics. For example, Goldman Sachs' GARP Group shares trade at an average price-to-earnings ratio of 16 times, while S&P 500 members trade at an average price-to-earnings ratio of 17 times.
Additionally, both names have potential catalysts to unfold in 2024. Both LVS and Wynn are considered among the leading contenders for three substate casino licenses that New York state regulators may issue sometime next year.
In addition to this, the operator has plans for expansion of integrated resorts in Asia Pacific, as well as progress on Wynn's upcoming casino hotel in the United Arab Emirates (UAE).
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Source: www.casino.org
