Caesars Entertainment, MGM Resorts, and Las Vegas Sands are the 3 Best Hotel Stocks to buy in May 2024, according to Wall Street analysts. We used TipRanks Best Hotel Stocks tool to find three hotel and casino companies with a Strong Buy consensus rating and lucrative upside potential in the next twelve months.
The travel and hotel industries are in a boom period following the pandemic. People are spending more on vacations as seen from an acceleration in international travel demand and high levels of hotel bookings. As macroeconomic headwinds start cooling off and support customers’ finances, the hotel sector is expected to witness higher visitations and strengthen even more going forward. With this background in mind, let’s dive into the three hotel stocks to understand why analysts are bullish on them.
#1 Caesars Entertainment (NASDAQ:CZR)
Caesars Entertainment is one of the largest gaming and hotel companies in the U.S. It was formed by the combination of two large gaming entities: Caesars Entertainment and Eldorado Resorts. The company hosts over 50 destinations serving the entertainment, hospitality, and gaming industries.
In Q1 FY24, Caesars reported a massively wider-than-expected loss of $0.73 per share compared to $0.63 per share in the prior-year quarter. Also, revenues of $2.74 billion declined 3.1% year-over-year and missed the consensus by $8 million.
Management attributed the poor performance to weather-related weakness in January and early February as well as unfavorable results of the Super Bowl and March Madness. Even so, Caesars is optimistic about a rebound in performance in the rest of 2024. Caesars is focusing on improving its occupancy, expanding its sports betting offerings, and driving meaningful partnerships in the sports betting and gaming segments.
Is Caesars Entertainment a Good Buy?
Even though several analysts lowered their price targets on CZR stock following the Q1 print, the overall sentiment on the stock remains bullish. Analysts see the current headwinds as temporary and are encouraged by the growing Digital and Regional revenues going forward.
On TipRanks, CZR stock has a Strong Buy consensus rating based on ten Buys and three Hold ratings. Also, the average Caesars Entertainment price target of $53.73 implies 67.1% upside potential from current levels. In the past year, CZR shares have lost nearly 22%.
#2 MGM Resorts (NYSE:MGM)
MGM Resorts is an international hospitality and gaming company. It operates destination resorts in Las Vegas, Massachusetts, New Jersey, and other U.S. destinations, as well as in China and Japan. Furthermore, BetMGM, MGM’s 50/50 venture, provides U.S. sports betting and online gaming through brands like BetMGM and PartyPoker.
In Q1 FY24, MGM exceeded analysts’ estimates on both the top and bottom lines. MGM attributed the robust performance to its MGM China operations and continued momentum at luxury properties in Las Vegas. Consolidated net revenues rose 13% and adjusted EPS jumped by 68.2% year-over-year. Furthermore, MGM repurchased 12 million shares during the quarter as part of its ongoing stock buyback plan.
What is the Price Target for MGM?
Analysts are highly optimistic about MGM’s casino and gaming operations, especially with the reopening of China markets. Moreover, MGM’s strategic licensing agreement with Marriott (MAR) and the progress related to the venture in Japan bodes well for future quarters.
With 13 Buys and two Hold ratings, MGM stock has a Strong Buy consensus rating on TipRanks. The average MGM Resorts price target of $57.54 implies 48.7% upside potential from current levels. MGM shares have declined 2.4% in the past year.
#3 Las Vegas Sands Corp. (NYSE:LVS)
Las Vegas Sands develops and operates integrated resort destinations, equipped with luxury accommodations, entertainment, gaming, retail, and convention and exhibition centers. The company’s properties are located in the U.S. and Asia.
LVS also pays a regular quarterly dividend of $0.20 per share, reflecting an above-average yield of 1.34%. Plus, LVS repurchased $450 million worth of common shares during Q1 and has $1.05 billion remaining under the current program.
In Q1 FY24, LVS’ adjusted EPS of $0.75 increased by an impressive 167.9%, while net revenues rose 39.6% compared to the year-ago period. Importantly, both EPS and revenues beat the consensus estimates.
Is LVS Stock a Good Buy?
Analysts are optimistic about the expected revenue potential of the company’s Marina Bay Sands (MBS) property in Singapore, which is currently undergoing refurbishment. Also, the Londoner Macao property is scheduled to undergo Phase 2 renovations, which will accelerate visitations going forward.
On TipRanks, LVS stock commands a Strong Buy consensus rating based on 11 Buys and one Hold rating. The average Las Vegas Sands price target of $61.73 implies 40.6% upside potential from current levels. In the past year, LVS shares have fallen by 20.2%.
Key Takeaways
The hotel industry is cyclical in nature and sensitive to macroeconomic factors. Analysts are highly optimistic about the above three hotel stocks despite the current macro uncertainty. Plus, all three companies have high TipRanks Smart Scores (8,9,10), implying that they could outperform market expectations over the long run.
