Below is a brief note from Hedgeye CEO Keith McCullough explaining why we're adding Red Rock Resorts to Investing Ideas. Stay tuned for additional updates on this new stock idea from our Gaming, Lodging & Leisure sector head Todd Jordan and his team.
Remember, the winner in Reflation's Rollover is real (inflation adjusted) consumption.
So, on the other side of shorting "reflation" ideas, we'll keep telling you to allocate assets to real-consumption growth assets like US Tech and Consumer Discretionary.
Long rich people? We like that too; especially people who are feeling rich at casinos!
One of Todd Jordan's favorite US Gaming stocks is still Red Rock Resorts (RRR). Here's his latest update on the Las Vegas Locals market:
"We are currently in the midst of an LV locals refresh study and continue to come across compelling data points that suggest the local economy remains on a solid footing. Evidence of such strength is well publicized in the media via the typical indicators: home prices, wages, job growth, etc. In addition to the strength in those indicators, we’ve come across additional datasets that supports continued growth in the locals gaming sector.
Driver’s license surrenders, a proxy for immigration to Clark County has improved over the last 18 months and is now growing in the high single digit range – slightly ahead of historical averages. Additionally, total gasoline demand (# of gallons sold per month) has finally surpassed its prior cycle peak and is finally growing at its normal expansionary run rate.
Long term, RRR should be the primary beneficiary of the increasingly favorable supply/demand environment in the LV locals market."
