Wynn Resorts, Limited (NASDAQ:WYNN) – Clock That Stock
The Stock
Wynn Resorts, Limited (NASDAQ:WYNN) has received a lot of attention over the past couple of days on optimism that the recovering economy may bring about improving prospects to this company’s bottom line. Just what the economy needs after teetering on the brink of a depression, more gambling. Regardless of your thoughts on whether people will take their profits from the recent 7 week rally and gamble it away in Vegas, the stock has rallied over 8% since the start of April.
Money has been held so tightly to consumers sides over the last year and investors are betting that the investment of choice will now be games of chance. The markets themselves have been a game of chance for the last two years, so maybe it makes sense that as the market continues to recover that profits be taken out of the market and gambled away. It gives further meaning to “what happens in Vegas, stays in Vegas”. However, before I buy into the trend, I want to see clear indications of favorable impacts and not just prospects of growth, otherwise I’d be gambling myself.
Currently analysts are maintaining an outperform rating, on average, for this equity and institutions are refusing to bet further funds on this stock. At this time I cannot see any fundamental value that would provide clear indications that this stock will outperform over other investments as we progress through the recovery. The current P/E is about 356 times its reported earnings for the past year, and if current earnings estimates for 2010 hold true, the P/E comes down to around 100, still well above where it reasonably should be.
The only equivalent economic period we can compare this equity to in its traded history is the downturn of 2003, which brought significant gains to this stock as signs of recovery became clear. Gains topped 130% over the year of recovery, which is a reasonable explanation as to why investors are drawn to this stock now. The stock has already gained 164% since the market bottom. A target of $90 is a reasonable level for this equity, however an entry point based on weakness to play this stock through its period of seasonal strength is that much more appealing.
Chart Courtesy of StockCharts.com
The Clock
The stock customarily tops out just before Q1 earnings release, this year on May 5, 2010. The seasonality following this release is negative going into the summer at which time the stock rebounds to gains of 20% by the end of September. Best bet is to keep this stock in your back pocket until the summer in order to effectively gauge the bottom line effects that the recovery will have on this gaming stock. The gains expected as a result of the economic recovery are strong throughout the year, so you won’t be risking too much by firming up your bet with further information.
| Wynn Resorts, Limited (WYNN) 82.28 | + 4.88 (6.3%) | |||||||||||||||||||||
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| Seasonality Analysis | ||||||||||||||||||||||
| Analysis has revealed that with a buy date of March 9 and a sell date of December 16, investors have benefited from a total return of 951.51% over the last 7 years. This scenario has shown positive results in 5 of those periods. | ||||||||||||||||||||||
| Conversely, the best return over the maximum number of positive periods reveals a buy date of November 19 and a sell date of December 7, producing a total return over the same 7-year range of 92.94% with positive results in 7 of those periods. | ||||||||||||||||||||||
| The buy and hold return for the past 7 years was 250.15%. | ||||||||||||||||||||||
| Technical Analysis | ||||||||||||||||||||||
| Support 2 | Support 1 | Pivot Point | Resistance1 | Resistance2 | The Numbers | |||||||||||||||||
| 76.25 | 79.26 | 80.81 | 83.82 | 85.37 | Most Recent Close: | 82.28 | ||||||||||||||||
| Support/Resistance Analys | Broke Upr Resistance (2) | 52-Week High: | 82.35 | |||||||||||||||||||
| MACD Analysis: | Positive/Increasing | 52-Week Low: | 25.15 | |||||||||||||||||||
| MACD vs. Signal: | Above/Widening | Fib. Retracement: | ~ 100% | |||||||||||||||||||
| RSI Analysis: | Increasingly Overbought | 50-Day MA: | 67.82 | |||||||||||||||||||
| Stochastic (Fast) Analysis: | Increasingly Overbought | 200-Day MA: | 58.54 | |||||||||||||||||||
| 50 vs 200-Day MA Analysis: | 50-day Above 200-Day MA | High Critical Level: | 77.42 | |||||||||||||||||||
| Year over Year Trend: | Strongly Gaining | Low Critical Value: | 63.66 | |||||||||||||||||||
| Critical Level Analysis: | Broke Above Previous Tren | Average Monthly Gain: | 14.8% | |||||||||||||||||||
| MFI Analysis | Above 50 Advancing | Technical Rating: | 8 | |||||||||||||||||||
| Candlestick Analysis | Significantly Bullish | On a scale of 1 to 10, the higher the rating, the more appealing the investment is to buy at current levels. | ||||||||||||||||||||
| Situational Analysis | ||||||||||||||||||||||
| Past Year | Advancing Sessions % | Return % | 10-Year Average | Advancing Sessions % | Return % | |||||||||||||||||
| Apr 5 thru May 5 | 71.4 | 68.6 | Apr 5 thru May 5 | 49.3 | 8.3 | |||||||||||||||||
| Best Return: 68.6% – Sell May 5 | Best Return: 15.1% – Sell Apr 21 | |||||||||||||||||||||
| Apr 5 thru Jul 4 | 46.8 | 12.7 | Apr 5 thru Jul 4 | 44.7 | -6 | |||||||||||||||||
| Best Return: 68.6% – Sell May 5 | Best Return: 17.3% – Sell Apr 28 | |||||||||||||||||||||
| Apr 5 thru Oct 2 | 51.6 | 128.2 | Apr 5 thru Oct 2 | 48.4 | 26 | |||||||||||||||||
| Best Return: 147% – Sell Sep 29 | Best Return: 40.8% – Sell Jul 14 | |||||||||||||||||||||
| Following Q1 Earnings Releases – Last 5 Periods | During Equivalent Periods of Economic Recovery where Unemployment has Peaked | |||||||||||||||||||||
| 5-Period Average | Advancing Sessions % | Return % | 1-Period | Advancing Sessions % | Return % | |||||||||||||||||
| 30 Days After | 45.2 | -4.7 | 90 Days After | 60.3 | 49.5 | |||||||||||||||||
| Best Return: 3.4% – After 14 Days on Average | Best Return: 49.5% – After 88 Days on Average | |||||||||||||||||||||
| 60 Days After | 42.2 | -13.6 | 180 Days After | 58.9 | 118.4 | |||||||||||||||||
| Best Return: 3.4% – After 14 Days on Average | Best Return: 118.4% – After 179 Days on Average | |||||||||||||||||||||
| 90 Days After | 47.4 | -2 | 360 Days After | 53.8 | 130.1 | |||||||||||||||||
| Best Return: 6.3% – After 55 Days on Average | Best Return: 159.3% – After 279 Days on Average | |||||||||||||||||||||
| Further Analysis | ||||||||||||||||||||||
| Sector: | Services | Industry: | Resorts & Casinos | |||||||||||||||||||
| According to Thackray’s 2010 Investors Guide, the period of seasonal strength for the Consumer Discretionary Sector ranges from October 28th through to April 22nd. Corresponding to the seasonality of the broad market, this sector finds strength from consumers buying/upgrading large ticket items (cars, homes, etc.) during late winter & early spring, and of course let’s not forget the holiday buying season. This sector peaks just before equity markets top out in May. | ||||||||||||||||||||||
| Current Consensus Recommend: | Outperform | |||||||||||||||||||||
| Recommendation 1-Month Ago: | Outperform | |||||||||||||||||||||
| Recommendation 3-Months Ago: | Outperform | |||||||||||||||||||||
| Disclaimer | ||||||||||||||||||||||
| Analysis, comments, calculations, and opinions offered in this report, available via EquityClock.com, are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed. | ||||||||||||||||||||||
| © 2010 EquityClock.com, member of the Tech Talk Financial Network | ||||||||||||||||||||||
Stocks mentioned in this post: WYNN
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