The house always wins.
I imagine youve heard that saying before.
Another, related saying is: You cant win if you dont play.
I often hear that one with respect to the lottery. But the insight is transferable: Casinos (the house) cant win if you dont play.
As the U.S. continues to manage through this wicked virus, places are reopening.
This is good for those who want to get out of the house.
And its good for the house. So, lets take advantage of it.
Lets make the house pay us for once
In a March 26 article, I looked at beaten-down names that had been ravaged by COVID-19.
What I noticed was: When looking at comparable names, it often makes sense to buy the one that has fallen the most.
One of the companies that had fallen the most was Boyd Gaming Corp. (NYSE: BYD). Its shares fell more than 80% from its 52-week high in February.
But today, things are less bleak for Boyd and for its peers.
Lets see what the house is cooking
There are signs of life.
On Monday, Eldorado Resorts said it would reopen three of its Louisiana casinos.
Shares rose 20% on the day of the announcement. And theyve continued to move higher since.
MGM Resorts said it will begin to reopen its casinos in Mississippi by the end of May.
Some casinos that have already reopened have hosted gamblers from halfway across the country.
This is real!
Boyd Gaming owns 29 casinos in 10 states. It started to open its casinos in Louisiana and Mississippi starting on Wednesday.
Boyd has seven centers in the two states. Theyll all be open by the end of the month.
After all, the house cant win if you dont play.
And with more people playing, Im looking at Boyd shares.
Boyd executives know shares are cheap. They remain more than 40% below their 52-week high.
Were seeing signs that important people people who are in the know believe theres tremendous upside here.
Over the past month, insiders at Boyd bought more than $1.6 million worth of company shares.
That was the sixth most of any company in the consumer discretionary sector.
And theyre not the only ones.
Billionaire Steven Cohen runs Point72 Asset Management.
Hes one of the most talented hedge fund managers. Forbes ranks him as the 100th richest person in the world.
His group increased its stake in Boyd by 700 times in the first quarter. It bought more than 1 million shares.
Things are starting to go Boyds way. This is an attractive chart:
BYD Has More Than Doubled Since March 18
This is what happens when a stock goes from bad to less bad. Boyd is making higher highs and higher lows.
I suggest you look into shares today. People are looking to get out of the house which will benefit the kind of house that Boyd runs.
I believe shares will rise to $25 in short order as we return to more normal times.
This could be a short-term trade, however.
If COVID-19 cases flare up, casinos will be one of the first places to close again. So be prepared to take your profits off the table.
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