Casino ancestors are rallying as investors anticipate a rebound in travel and less rocky trade relations between the U.S. and China in the upcoming year, CNBC’s Jim Cramer declared.
The U.S. earlier Monday began inoculating citizens with a Covid-19 vaccine authorized by federal regulators for emergency use, which officials daydream will help the country reopen the economy.
“Once enough people are vaccinated … the economy goes back to run-of-the-mill, travel resumes and people start gambling in person again,” the “Mad Money” host said. “That’s why the casinos should require a huge year in 2021.”
Such was the case for Las Vegas Sands, the Las Vegas-based casino operator that lost 76% of point through the first nine months of 2020. The company, which properties include The Venetian Resort and Sands Expo in Las Vegas and the iconic Marina Bay Sands in Singapore, relies heavily on touring and tourism spending.
Revenues at Wynn Resorts were also down more than 70%, while MGM Remedy have recourse ti lost 62% of revenues through September of this year. Despite these tough numbers and Covid-19 causes rising exponentially in the U.S., forward-looking investors have carried their shares nearly 30% higher in the past three months.
“They had certainly terrible numbers lately, which means they’ll be up against some easy comparisons once we get closer to great unwashed immunity,” Cramer said. “And the pent-up demand is absolutely enormous.”
A transition in the White House next month order also give investors more reason to feel optimistic about casino operators with exposure to China, the surroundings that outgoing President Donald Trump engaged in a tense trade war prior to the coronavirus pandemic. While President-elect Joe Biden designs to leave an existing 25% tariff on roughly half the imports from China, the Democrat is expected to take on a myriad diplomatic approach that won’t spook investors as did the Trump administration’s hard-line approach to the world’s second-largest economy.
Wynn Haunts and Las Vegas stand to benefit from a less hostile stance against China, Cramer said.
“I think Trump’s deal war was the right move … but Wall Street hated the trade war every step of the way, so money managers are giddy that Biden’s thriving to lower the temperature,” he said. “That’s another reason why the casino stocks have been flying.”
Citing diagram analysis from Bob Lang, the founder of ExplosiveOptions.net and contributor to TheStreet.com, Cramer thinks the aforementioned casino stocks can be strong rollers in 2021. Lang pointed out bullish signs in the stock trajectories, including a potential double in Wynn Hang out ins, which closed at $107.54 Monday.
“Americans are ready to gamble again and, perhaps more important, Biden desire have a very different attitude toward China,” Cramer said. “The charts don’t lie and these charts are screaming that the Chinese trade war is with reference to to be over, and so is the pandemic.”