Although the economy as a whole has gradually overcome pandemic-induced uncertainties this year, inflationary pressures have once again sent investors back into the back seat. Supply chain headwinds and the geopolitical environment are also hurting most industries.
Concerns about a global slowdown and possible recession loom over the stock market. Market experts fear that the Federal Reserve’s hawkish stance to control inflation could push the economy into a recession. High inflation continues to plague the industry. Inflation in the United States is proving to be much more tenacious than expected.
However, Fed Chairman Jerome Powell’s recent comment on reducing the magnitude of the rate hike from December was a respite. The Fed is expected to hike interest rates by 50 basis points this time instead of 75 basis points.
Year-to-date, the recreation and leisure services industry is down 36.5%, compared to the 18.7% decline in the S&P 500. In the face of the current market meltdowns, all major Stock indices are in bearish territory. Battered stocks like Caesars Entertainment, Inc. CZR, AMC Entertainment Holdings, Inc. AMC and Live Nation Entertainment, Inc. LYVs are currently available at low prices and are expected to turn around in 2023. These stocks have strong fundamentals, which will help drive their price up in 2023.
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Caesar Entertainment: Caesars Entertainment is a diversified gaming and hospitality company based in Reno, NV. Zacks Rank #2 (Buy) stock is down 47.2% from the 18.7% drop in the S&P 500 and has a VGM score of A. In 2023, the company’s sales and earnings are expected increase by 5.6% and 131.5%, respectively, year after year. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company is optimistic about booking trends, as it sees an increase in bookings for group and convention hall nights. The company expects an upward trend in bookings to continue in 2023. CZR is focused on expanding sports betting to drive growth. To that end, the company has formed a new Caesars Digital segment comprising sports betting, iGaming and poker. The company has integrated its digital offerings with Caesars Rewards across online and physical casinos. As of September 30, the company operated sports betting in 27 jurisdictions, 19 of which are mobile. Furthermore, it indicated the availability of iGaming offers in 5 jurisdictions.
AMC Entertainment: Based in Leawood, KS, the company is engaged in the theatrical exhibition business. The business is benefiting from an increase in global footfall. AMC Entertainment is implementing comprehensive health and sanitation programs, which include enhanced cleaning procedures and enhanced air filtration efforts, to ensure maximum guest safety.
Shares of the Zacks Rank No. 2 company are down 78.1% year-to-date. However, the company’s robust earnings and sales growth rate for 2023 should drive the stock higher. In 2023, the company’s earnings and sales are expected to grow 17.3% and 72.5%, respectively, year-over-year.
Live Nation Entertainment: Based in Beverly Hills, California, Live Nation Entertainment operates as a live entertainment company. Although shares of the company Zacks Rank #3 (Hold) are down 40%, it has a VGM score of B. In 2023, the company’s sales and earnings are expected to increase by 3.9% and 121.7 %, respectively, year over year.
The company should benefit from pent-up demand for live events and robust ticket sales. This and the increased demand for digital ticketing and contactless transactions bode well. The company is optimistic about its growth prospects in 2023. The focus on cost reduction efforts bodes well. For the 2023 shows, the company is seeing even stronger ticket sales. In 2023, the company plans to add more sites to its operating portfolio. In terms of tickets, the company should benefit from the evolution of market prices.
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