He told TheStreet Thursday MGM is his sector favorite for its investments in Macau, the resurgence of the convention and hospitality industry in Las Vegas, and the pending opening of its $1.4 billion casino at the National Harbor just outside of Washington D.C.
Macau is one of the three key areas that will lead gaming stocks higher in the coming weeks. After 26 consecutive months of declines, the Macau gaming region has seen revenue growth for three straight months.
Katz also noted the revival of the Las Vegas Strip and expansion non-traditional gaming markets as catalysts for MGM stock, which trades around $28. "Las Vegas has the strongest momentum of any area. In particular, the Strip is doing well thanks to conventions and the hospitality industry," Katz said.
MGM pointed to its investment in Atlantic City as one of the reasons year-over-year third-quarter revenue jumped to $2.52 billion from $2.28 billion. "The Borgata is the market share leader and strongest casino in Atlantic City," Katz said. "Now they are the sole proprietors of the casino and they are seeing the benefits."
If you don't want to gamble on individual stocks, consider the VanEck Vectors Gaming ETF's (BJK - Get Report) chart. Over the past six months the index is up nearly 9% and year to date its up nearly 11%.
Las Vegas Sands (LVS - Get Report) , its Chinese subsidiary Sands China (SCHYF) and MGM Resorts International are the three largest holdings in the fund, with each representing 8.58%, 8.31%, and 7.27% of the fund respectively.
- Las Vegas Sands has been the best performing security in the exchange fund climbing more than 36% year to date as Sands China has benefited from the company's increased activity in Asia. Sands China saw a 15.3% increase in adjusted property EBITDA its its most recently reported quarter thanks to a 19% year over year increase in property visitations.
- Meanwhile, MGM shares have risen nearly 26% year to date, including a 10.8% jump over the past five sessions. Earlier this week, the company reported third-quarter earnings of 33 cents per share on revenue of $2.515 billion. The company's earnings for the quarter were nearly triple the 12 cents per share the company reported a year ago and more than double the $0.14 per share analysts were expecting the company to report. Revenue also came ahead of Wall Street's $2.4 billion expectations.
- The fund's Chinese representation goes beyond Sands China, however, and features Galaxy Entertainment Group (GXYEY) , a Hong Kong based gaming and entertainment business that operates in Macau. Galaxy represents 7.1% of the fund.
- Rounding out the top five is Gaming and Leisure Properties (GLPI - Get Report) . Just under 5% of the fund is comprised of the Pennsylvania real estate investment trust. The company's portfolio consists of about 20 gaming and related properties across the country.