Why Investors Should Avoid Betting on This Casino Stock

CZR is already down 45.5% year-to-date

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This commentary first appeared on Forbes Great Speculations, where Schaeffer's Investment Research is a regular contributor.

Surging inflation and the prospect of higher interest rates has left Wall Street on edge over the past couple of months, leading to multiple broader-market selloffs that have surely had an impact on investors’ portfolios. As we approach the halfway mark of 2022, investors may be reassessing their investment strategies for the remainder of the year. One stock in particular they may want to avoid going forward is Caesars Entertainment Inc (NASDAQ:CZR), since the casino name just made onto a list of 25 stocks that have historically underperformed in June.  

More specifically, Caesars Entertainment stock is among the top five names on Schaeffer's Senior Quantitative Analyst Rocky White's list of worst S&P 500 Index (SPX) equities to own in June over the last decade. The security averaged a 2.3% drop for the month, settling lower in roughly seven out of those 10 years.

The casino stock has had a dismal 2022 thus far, down 45.5% year-to-date. The shares are also now sitting well below their 80-day moving average, which has been pressuring the security lower since November. Though CZR is now bouncing off an annual low of $42.59, it’s struggling to break past the $52 level.

CZR 80 Day

Analysts are firmly bullish towards Caesars Entertainment stock, with all 10 in coverage calling it a “buy” or better, which leaves plenty of room for pessimism going forward.

An unwinding of optimism in the options pits could also pressure the security lower. This is per CZR’s 50-day call/put volume ratio of 3.08 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all annual readings. In other words, there has been a healthier-than-usual appetite for long calls of late.

 

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