In the gaming sector, most of the attention is drawn by big names like MGM Resorts (MGM) and Wynn Resorts (WYNN) . Those stocks have performed well in recent years, with Wynn returning an outstanding 94.88% last year on top of a 25.03% return in 2016.
Like a card counter that successfully avoids detection, there is another name in this sector that may have eluded investors' attention. For example, Boyd Gaming (BYD) has a market cap of just $4 billion, so it rarely makes headlines. Yet this little casino stock has been a high roller, cashing in a gain of about 440% since the start of 2013. Boyd's casinos are predominantly located in the Southern and Midwestern U.S., as well as in Las Vegas.
Technically speaking, this stock is a buy. Boyd Gaming recently broke out of a bullish pattern known as an inverted head and shoulders (semicircles). The stock broke out of the pattern on May 14 (point A).
This breakout is likely to succeed, because it occurred on the stock's highest volume day in nearly three months (point B). The high turnover tells us that institutional money is the likely catalyst behind the move. High volume is a sign of commitment and tells us that buyers have made a significant investment in the stock.
Note how the stock remained above its 200-day moving average (red) throughout the formation of the pattern, a positive sign. Think of that 200-day MA as an emergency brake if anything should go wrong with the stock. A break below that line would be a signal to traders to cut losses and move on.
Chart by TradeStation
Boyd Gaming is likely feeling the positive effects of last week's Supreme Court ruling that opened the door to legalized sports betting across the U.S. In the wake of the decision, Bank of America Merrill Lynch upped its price target for the stock to $45 from $42. Earlier this month, Barclay's upgraded the stock to overweight and raised its target price to $40.
In its decision, the Supreme Court voided a 1992 federal law prohibiting sports betting at U.S. casinos and racetracks outside of Nevada. Over a dozen states have already passed laws legalizing sports betting in anticipation of the court's ruling. Legalized sports betting is expected to become available first in New Jersey, home of a 2014 law that challenged the 1992 federal law.
This commentary originally appeared on our sister site Real Money Pro. Click here to learn about this dynamic market information service for active traders and to receive daily columns from Ed Ponsi, Paul Price, Bret Jensen and others.