This article is part of a Real Money series on a dozen companies investors should consider adding to their watch list of so-called "vice stocks."
Adding to a persistent climb in share prices this year, Wynn Resorts (WYNN) topped the S&P 500 Monday, following the publication of a better-than-expected industry report.
The Macau Gaming Inspection and Coordination Bureau released its April report on casino revenue Sunday, which fell 9.5% year over year, but topping analyst forecasts of a 13.5% decline, based on Bloomberg consensus data.
Shares of Wynn -- a member of Real Money's "Vice Squad" watch list, along with Las Vegas Sands (LVS) and Churchill Downs (CHDN) -- are up 36% on the year as shareholders increasingly grow more bullish on a recovery in casino revenue in the Chinese administrative region.
Total gaming revenues in the region fell to $29 billion last year, representing a 34% drop from 2014, according to annual statistics published by the bureau. Wynn's total Macau casino revenues last year of $2.31 billion fell 36% year over year.
Meanwhile, shares of Las Vegas Sands, which booked $5.8 billion in sales tied to its Macau operations last year, jumped nearly 4% on the day.
"Wynn should benefit from our positive long-term view of the Macau gaming market; however, we see equal risk/reward given nearterm uncertainty," Wells Fargo Securities analyst Cameron McKnight said in a recent report, noting that Las Vegas Sands has a more dominant scope of the recovering market than Wynn and competitor Melco Crown Entertainment (MPEL), whose shares jumped 4% on the day.
"Las Vegas Sands appears best positioned for when the Macau market is full," he said in the report, noting that the market's 13% decline in the first quarter, year over year, also outperformed expectations of a 16% drop.
Real Money's Vice Squad Watch List
- Diageo (DEO)
- Molson Coors (TAP)
- Constellation Brands (STZ)
- Reynolds (RAI)
- Altria Group (MO)
- Philip Morris (PM)
- Vista Outdoors (VSTO)
- Smith & Wesson (SWHC)
- Sturm Ruger (RGR)
- Wynn Resorts (WYNN)
- Churchill Downs (CHDN)
- Las Vegas Sands (LVS)