Why MGM’s Reopening is too Risky to Bet On

MGM and other casinos are opening back up – but it may not last long…

This story was originally published here.

Like so many gaming names, MGM Resorts (NYSE:MGM) is one of notable redemption stories in the novel coronavirus reopening trade as MGM stock is higher by 40% for the month ending June 10.

As the largest operator on the Las Vegas Strip, MGM is highly levered to the U.S. economy escaping the grip of Covid-19. Last weekend, the company restarted the Bellagio, MGM Grand and New York New York on the Strip. Excalibur joined the fold on June 11 and demand is robust following a more than two-month shutdown.

MGM said earlier this week it will reopen the Luxor and The Shoppes at Mandalay Bay later this month with ARIA and the Four Seasons at Mandalay Bay welcoming players back on July 1.

In addition to Nevada, MGM runs integrated resorts in Maryland, Massachusetts, Michigan, Mississippi, New Jersey, New York and Ohio. To strong demand, the Mississippi properties restarted last month while the company’s Maryland, Michigan and Ohio venues are slated to be back online later this month.

All of that amounts to good news for MGM. After all, running casinos is a cost-intensive business and many of those costs are fixed, meaning operators are shelling out upward of millions of dollars per property on a daily basis, regardless of whether or not the property is up and running.

Second Wave Jitters

Somewhat lost in all reopening ebullience and political commotion that’s commanding so many headlines these days is that, unfortunately, the coronavirus is still with us and there still isn’t a cure or a vaccine ready to treat patients.

Although bars, casinos, restaurants and other leisure destinations are reopening with new health and safety protocols, and at limited capacity, with so many people trying to get back to their pre-virus lives, relevant fears about a second wave of Covid-19 cases are increasing.

In a Today Show interview, Dr. Ashish Jha, director of the Harvard Global Health Institute, said it’s possible that if a second wave of coronavirus cases hits, the U.S. death toll from the respiratory illness could hit 200,000 by September. A major problem for MGM and other gaming equities is that data suggests virus cases are increasing in some of the states that either did not shutdown or were among the first to reopen.

Editor's Note: Click here to keep reading.

Dump America’s Most Popular Brand NOW

During times of great volatility, investors often cling to what they’re familiar with… including the stocks of companies they know best.

Fear and conventional wisdom push people to the biggest brands.

But what if I told you that America’s top stock picker — a man with 40 recommendations that have gained at least 1,000% in his career — believes that America’s most popular brand is a “must sell” right now?

That’s exactly what Eric Fry is saying…

Because this giant of the past was doomed with or without the fear of a pandemic.  Eric believes it’s one of 25 big-name stocks that are going to experience hard times, even if a coronavirus cure is found tomorrow.

And, remember, Eric is the legendary trader that accurately predicted the collapse of more than 70 stocks. That includes Cisco (fell 75% in a year after his prediction), Tyco (fell 74% in the year after his prediction), and Countrywide Financial (fell 87% in the two years after his prediction).

Instead, Eric believes anyone with money in the market should focus on four companies that are in position right now to help people capture huge market gains.

You probably haven’t heard of a single one of these firms…

But you will.

Get the facts for yourself and be one of the first to learn more about the four stocks you should buy right now… as well as the 25 companies you should sell immediately, on our website, here