BJK: Buy Casino Stocks Now While Coronavirus Fears Are At Their Peak

News broke last week that the first case of the coronavirus has appeared in Macau.

Casinos in Macau are using temperature screening machines at all entrances and all employees are wearing surgical masks in measures aimed at preventing an outbreak.

With travel from country to country essentially shut down, Macau casinos are missing their big opportunity during the Lunar New Year.

Casino stocks, such as Las Vegas Sands (LVS), Wynn Resorts (WYNN) and MGM Resorts International (MGM), have gotten hammered in recent days despite ticking back up modestly on Tuesday.

LVS_WYNN_MGM_chart

While gaming stocks are in a sharp correction, it's important to keep an eye on the longer-term picture.

In other words, the coronavirus will be a temporary event. This isn't like an economic downturn where customer behavior turns fiscally conservative for an extended period of time. This is a short-term scare that will spook investors for a time, but ultimately won't impact these businesses long-term.

And that presents a buying opportunity.

These casino stocks are essentially on sale for 10-15% off. As long as dealers are wearing hospital masks, people will continue fearing the worst. As soon as health organizations suggest the spread of the coronavirus is slowing or it eventually gets contained, these stocks will shoot right back up.

How To Play It In Your Portfolio

The VanEck Vectors Gaming ETF (BJK), a fund that targets gaming and leisure stocks, is down about 9% from its 2020 high.

Screen Shot 2020-01-29 at 6.12.11 AM

If you want a broad, all-in-one option, this would be your choice. It's pretty thinly traded, so you may want to use a limit order to ensure you get the price you want.

Otherwise, buying LVS, WYNN or MGM individually would do the trick too.

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Comments (1)
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David Dierking
David Dierking

Editor

Macau just shut down its casinos for two weeks related to the coronavirus. Wynn and MGM up 2-3% on Tuesday, but $BJK has yet to trade. Keep an eye on this trade, but so far it's looking good.