Looking at the performance of the stock market, it’s hard to believe that we are still in the midst of a global pandemic. the S&P 500 It was up around 1.24% as of this writing, erasing most of its losses in the first quarter. But despite the massive recovery, there are still some opportunities for investors to get quality stocks at a low price, especially in the tourism industry.
Walt disney (NYSE: DIS) and MGM Resorts (NYSE: MGM) They are two vacation actions that fit the bill. Both companies carry world-class brands and have catalysts for long-term growth in this challenging economic environment. Here’s why both stocks are poised for a bull run.
Image source: Getty Images.
1. Walt Disney
Walt Disney is being hit from all sides during the coronavirus pandemic, with its delayed films, shore cruise lines, and amusement parks operating at reduced capacity. This month, Disney closed its Hong Kong location again after an increase in infections in the city. And once again has delayed the launch of Mulan because cinemas in the United States and China remain closed amid the crisis.
But despite the short-term challenges, Disney remains an attractive investment due to its rock-solid brand and fast-growing media operations. The company’s media networks and direct-to-consumer broadcast businesses are growing fast enough to offset declines in its coronavirus-affected segments, and will benefit from demand to stay home if the crisis worsens.
Disney reported second-quarter earnings on May 5, and the results show stellar performance on the company’s new streaming services, Disney +, Hulu, and ESPN +.
Overall, the direct-to-consumer segment increased sales 258% from $ 1.15 billion to $ 4.12 billion year-over-year, and this performance was driven by the fast-growing Disney + platform that now has 33.5 million subscribers. Payments. Hulu and ESPN + have 32.1 million and 28.8 million subscribers, respectively. Disney’s direct-to-consumer segment is poised to take on bigger rivals like Netflix Because all three platforms can be bundled together in a cost-effective package of $ 12.99.
2. MGM Resorts
MGM Resorts is one of the world’s most iconic casino operators, known for its renowned properties like Bellagio and MGM Grand in Las Vegas. The gaming giant also has a large presence in Asia through a handful of resorts in Macao, China.
MGM Resorts, like all casino operators, has been crushed by the coronavirus pandemic. Stocks are down 52% to date compared to a 1% decline in the S&P 500. But despite the short-term challenges, MGM is poised for a massive rally due to its expansion in sports betting and the reduction of travel restrictions in China, where it generated around 23% of revenue for fiscal year 2019.
On July 15, mainland Chinese officials lifted some restrictions on visitors leaving the Guangdong province for Macao. Guangdong is the main entry point for mainland Chinese visitors to Macao, and this move is expected to ease some of the pressure on the game center. The MGM CEO believes that Macau gaming revenue will rebound quickly when travel restrictions are lifted. But investors shouldn’t expect sales to return to previous levels immediately because travelers will still be subject to some restrictions, such as mandatory testing for COVID-19 before entering or leaving the city.
MGM also has a growth opportunity in sports betting: The market is projected to expand at a compound annual growth rate of 8.8% until 2024. The company has developed a mobile application called BetMGM that offers regular sports betting and casino games. on the progress. . MGM is promoting its new business through partnerships with respected sports brands like the Buffalo Wild Wings and the Denver Broncos.
Food to go
The coronavirus pandemic remains a major challenge for the tourism industry going forward. But companies like Walt Disney and MGM Resorts can bounce back due to their strong brands, diversified business models, and expansion in mobile revenue opportunities like streaming and sports betting. Both companies appear poised for a bull run, and this is a good opportunity for investors to jump on board while prices are still cheap.
