Time to Roll the Dice on Casino Stocks

WYNN stock is one of BJK's top holdings

by Karee Venema

Published on Sep 27, 2017 at 1:53 PM
Updated on Jun 24, 2020 at 10:16 AM

Casino stocks have had a strong year so far, with two-thirds of the stocks we track under our "gaming" umbrella trading north of their 80-day moving average. What's more, the VanEck Vectors Gaming ETF (BJK) is up 2.5% year-to-date to trade at $42.12 -- not far from its Sept. 20 two-year high of $42.51. The shares could be poised to hit even higher highs, should history repeat itself and/or skepticism begin to unravel on BJK component Wynn Resorts, Limited (NASDAQ:WYNN).

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, BJK has been one of the best-performing ETFs in October, looking back over the past 10 years' worth of data. Specifically, the shares have averaged a monthly return of 2.35%, and have been positive 67% of the time since they began trading in 2008. Based on the fund's current perch, a move of this magnitude would put the shares near $43.10 for the first time since December 2014.

october etf performance

WYNN is Hovering Near Multi-Year Highs

Wynn Resorts is one of BJK's top holdings, and the shares have been flying up the charts in 2017. Year-to-date, WYNN stock has added a noteworthy 69.3%. More recently, the security pulled back briefly after hitting a two-year high of $147.90 one week ago, but found a quick floor at its 30-day moving average -- a trendline that served as support earlier this year -- and was last seen trading at $146.50.

Nevertheless, there's plenty of pessimism levied toward the stock. Short interest jumped 10% in the most recent reporting period to 6.33 million shares -- four times WYNN's average daily pace of trading.

Plus, 60% of analysts covering Wynn Resorts stock maintain a tepid "hold" rating, while the average 12-month price target of $143.38 stands at a discount to current trading levels. Should WYNN continue its uptrend, a round of short covering and/or bullish brokerage notes could create tailwinds for the shares.

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