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Top stocks to play a potential casino comeback as Macao reopens

Top stock bets to play a potential casino comeback as Macau reopens
Top stock bets to play a potential casino comeback as Macau reopens

Investors are spinning the wheel on casino stocks again.

MGM Resorts, Las Vegas Sands and Wynn Resorts were all higher Wednesday as pressure tied to the coronavirus outbreak lessened. Operations in major gambling hub Macao, off the coast of China, will reopen Thursday after being  shuttered earlier this month.

Mark Tepper, president and CEO of Strategic Wealth Partners, said a return to regular business is in the cards.

"Gambling is addictive so there's obviously going to be pent-up demand and all these gamblers missed out on the biggest time of the year which is the Chinese New Year. So they want to get out and gamble," Tepper said Tuesday on CNBC's "Trading Nation." 

Of the three names, Tepper said one stock is a standout pick.

"I own and I like LVS. It's a play on the Chinese consumer," said Tepper. "This is a long-term play. The consumer in China is making more and more money, year after year after year. You have a true growing middle class in China -- we have a strong middle class in the U.S., but it's a very mature middle class. So, yes, as a long-term play, I think the spending does come back. I think LVS is a good play."

Las Vegas Sands generates 63% of its revenue from Macao and another 22% from Singapore. Macao EBITDA is expected to get cut in half in its March-ended quarter.

Bill Baruch, president of Blue Line Capital, said it's still too difficult to determine the impact on casinos with Macao exposure. However, he said one of those three does look good for a different reason.

"I think there's an attractive play here in MGM with sports gambling becoming legal here in the U.S. and some expansion there. I think MGM has a little bit of a lead there," Baruch said during the same segment. "There's an uptrend line on MGM I'm looking at at $28. All these stocks have held in very well given the recent news, but if we see another downdraft I'm looking at MGM at $28 and that's where I'd look to be a buyer."

MGM would need to fall 13% to reach $28. It has not traded at that level since October.

Disclosure: Tepper and Strategic Wealth Partners holds LVS.