RCL, MGM, WYNN: Which Leisure Stock Has the Most Upside?
Stock Analysis & Ideas

RCL, MGM, WYNN: Which Leisure Stock Has the Most Upside?

Story Highlights

The stage looks pretty good for the top leisure plays going into the new year. Numerous Wall Street analysts are upbeat on their trajectories, even in the face of remaining macro uncertainties.

The broader basket of leisure stocks has been a rather turbulent ride in the years following the worst of the COVID-19 pandemic. Going into 2024, numerous Wall Street pros still expect strong gains from some of the industry’s stronger plays — like RCL, MGM, and WYNN — as they look to continue meeting much of the pent-up demand built during the early days of lockdown.

Therefore, let’s check out TipRanks’ Comparison Tool to see how the following leisure plays stack up in the face of turbulent economic conditions.

Royal Caribbean Cruise Lines (NYSE:RCL)

It’s been an incredible 2023 for shares of Royal Caribbean Cruise Lines, which have more than doubled, surging around 147% year-to-date on the back of strengthening demand. Management seems incredibly upbeat following its latest third-quarter beat (adjusted earnings per share of $3.85 coming ahead of estimates), as it hiked its full-year profit guidance.

Numerous analysts continue to view the stock favorably, and I think they’re right to do so as bookings demand continues to heat up into the new year despite the macro headwinds.

Undoubtedly, robust bookings in the face of a challenged consumer environment may seem quite confusing. Indeed, we may very well be witnessing many consumers looking to meet pent-up demand built during the pandemic lockdown days. Going into the new year, I don’t expect recent bookings strength to cool off, especially if rates fall and consumer confidence gets a bit of a jolt.

As demand looks to heat up in 2024, I’d look for the firm to make the most of the upswing by pulling the curtain on new cruise ships. Doing so could give demand an additional shot in the arm. Who wouldn’t be excited to board a brand-new ship with all the amenities?

Oppenheimer analyst Ari Wald is upbeat on RCL stock, going as far as to name it one of his best picks to play the space. Many share Wald’s bullishness, with 80% of analysts covering the stock recommending RCL stock as a Buy. I’m inclined to agree with Wald and am staying bullish going into 2024.

What is the Price Target on RCL Stock?

Royal Caribbean stock comes in as a Strong Buy, with eight Buys and two Holds assigned by analysts in the past three months. The average RCL stock price target of $122.67 entails 2% upside potential.

MGM Resorts International (NYSE:MGM)

Year-to-date, MGM stock has been a hot performer, now up 30% over the timespan. The casino and hotel firm has come a long way since the dark days of COVID-19 lockdowns. And it doesn’t look like the firm is about to slow the pace of its recovery just because the macro outlook is uncertain in the new year.

The casino gaming heavyweight is roaring loudly for investors, with record revenues coming out of Las Vegas. After the latest bounce, I’m inclined to stay bullish while shares continue trading at a discount relative to the peer group. At writing, MGM stock goes for 14.6 times trailing price-to-earnings, well below the resorts & casinos industry average of 24.3 times.

With momentum also building in its digital gaming business (BetMGM), the stock seems like one of the most intriguing long-term plays in the leisure space. BetMGM CEO Adam Greenblatt is aware of the stakes (forgive the pun) in the digital gaming arena, and he’s ready to position the firm to remain a worthy rival.

My takeaway? Don’t bet against Greenblatt and company as BetMGM looks to gain ground in the new year. At this pace, even a mild landing for the economy may not be enough to drag MGM stock back in the gutter as Vegas and Macau look to flex their muscles in the new year.

What is the Price Target on MGM Stock?

MGM stock is a Strong Buy, according to analysts, with 12 Buys and one Hold rating assigned in the past three months. The average MGM stock price target of $55.25 implies 27.4% upside potential.

Wynn Resorts (NASDAQ:WYNN)

Wynn Resorts is another casino play that may be overly discounted by Mr. Market at this juncture. The stock has been on the retreat again, now erasing almost all of the year-to-date gains enjoyed in the first quarter of 2023. Despite clocking in a decent recent quarter, investors seem jittery over the softness in its Wynn Macau business.

Add wage hikes for the Culinary Workers and Bartenders Union into the equation, and it’s not a mystery as to why the stock has been tough sledding for most of the year. Personally, I believe the recent pessimism is overblown, and I am staying bullish on the stock, just like many analysts covering the name.

Despite the rough past quarter, the stock remains attractively valued at just 17.8 times forward price-to-earnings, which is in line with the resorts & casinos industry average of 17.33. As the Macau region recovers further, I do view Wynn shares as a worthy way to play China’s economic rebound.

What is the Price Target on WYNN Stock?

Wynn stock is a Strong Buy, according to analysts, with eight Buys and two Holds given in the past three months. The average WYNN stock price target of $119.17 implies 38.2% upside potential.

The Bottom Line

Leisure stocks continue to win over the confidence of Wall Street analysts. From cruises to casinos, the demand recovery is hard to look past as we move into a new year that may see lower rates and a somewhat more confident consumer.

Going into 2024, analysts expect the greatest upside potential (~38%) to be had from WYNN stock. With its large Macau exposure, WYNN definitely seems like the riskiest of the group. That said, higher risk tends to accompany higher rewards.


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