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Red Rock Resorts: A Good Value Bet On The Vegas Locals Market With A Tribal Kicker (NASDAQ:RRR)

Red Rock Resorts: A Good Value Bet On The Vegas Locals Market With A Tribal Kicker (NASDAQ:RRR)

Price at writing $17.82 Signal: Buy

We have been watching the trading trends on Red Rock Resorts, Inc. (RRR) for some time. As of late, there appears to be growing bullish sentiment on the stock related to its 2Q20 performance. Like the entire gaming sector, it has been pandemic battered. But analysts believed the revenue profile of the quarter beat expectations of a lesser decline than forecast. This they reasoned, was a buy signal for the stock which has been trading ~$17 a share. Those results to us are not dazzling enough alone to warrant a move on the shares. But there are deeper rationales we see spread over a longer time frame that give us conviction that RRR may now be at an attractive entry point.

ChartData by YCharts

As with all gaming stocks, we always begin with management culture and DNA. On that level, RRR stands with its Vegas locals competitors in executing a strong customer service culture dating back to its earlier life when it was Station Casinos. That is directly linked to the Fertitta family which founded and still controls a significant chunk of the equity.

(Biographical note: The Vegas Fertittas are distant cousins of Tilman Fertitta, swashbuckling Texas entrepreneur who runs Golden Nugget (GN), Landry’s Restaurants (LNY) and the Houston Rockets NBA team. Tilman and his family are prominent members of Houston’s business and philanthropic communities as are their Vegas cousins.)

Tilman made an exchange of stock run at Caesars (NASDAQ:CZR) last year that quickly faded at Eldorado Resorts (ERI) when Carl Icahn entered the fray. This gave rise to speculation among the chattering classes of Vegas that a possibility of a merger between the cousins could loom at some point going forward. I don’t put high percentage odds on that at the moment but

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3 Reasons to Bet on Pinnacle Financial (PNFP) Stock Now

3 Reasons to Bet on Pinnacle Financial (PNFP) Stock Now

Despite the continued concerns related to the pandemic and low rates, it seems to be a wise idea to add Pinnacle Financial Partners, Inc. PNFP stock to your portfolio now. The bank boasts solid fundamental and prospects.

Also, the stock has been witnessing upward earnings estimate revisions of late, reflecting analysts’ optimism regarding its earnings growth potential. The Zacks Consensus Estimate for its current-year earnings has been revised 1.5% upward over the past seven days, while that for the next year has been raised 3.1%. It currently carries a Zacks Rank #2 (Buy).

However, shares of the company have gained 8% over the past three months, underperforming the industry’s rally of 15.7%.

Here are a few factors that make Pinnacle Financial stock an attractive pick now.

Earnings Growth: The company witnessed earnings growth of 17.1% in the past three to five years, higher than the industry average of 13.7%. While its earnings are projected to decline 26.3% in 2020, the trend will likely reverse after that. In 2021, earnings are expected to grow 17.8%.

Revenue Strength: Pinnacle Financial’s revenues witnessed a compounded annual growth rate (CAGR) of 40.5% over the last five years (2015-2019). The uptrend in revenues is expected to continue in the near term as reflected by the company’s projected sales growth rate of 7.4% for the current year and 1.1% for the next year.

Favorable Valuation: The company seems to be trading at a discount with respect to its price/book (P/B) and price/earnings (P/E) (F1) ratios. Currently, it has a P/B ratio of 0.65, which is below the industry average of 0.77. Likewise, its P/E (F1) ratio of 11.30 is lower than the industry average of 12.31.

Also, the stock has a Value Score of B. Our research shows that stocks with a Value Score of A

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Hedge funds make pandemic bet on insurance

Hedge funds make pandemic bet on insurance

By Maiya Keidan and Carolyn Cohn



a tall building in a city: FILE PHOTO: Skyscrapers in The City of London financial district are seen during sunrise in London


© Reuters/HANNAH MCKAY
FILE PHOTO: Skyscrapers in The City of London financial district are seen during sunrise in London

LONDON (Reuters) – Five years after London-based hedge fund Toscafund ditched the shares it held in insurance companies, the $3.5 billion firm and its peers are flocking back, drawn by sharp premium increases which are lifting the sector’s post-coronavirus prospects.

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Insurers faced a surge in claims spanning trade credit to event cancellations as a result of the pandemic. Some have pulled out of unprofitable lines of business but for those who remain, the crisis has led to a steep rise in premiums, or a so-called “hardening” of the market, typical after a period of heavy losses.

Commercial insurance rates https://tmsnrt.rs/3nuB046 rose 19% year-on-year in the April-June quarter, says Marsh, the world’s largest insurance broker, the most since the firm started compiling data in 2012.

(Graphic: Global commercial insurance premiums (% change) – https://graphics.reuters.com/HEALTH-CORONVIRUS/INSURANCE/xegpbjdeypq/chart.png)

Insurance was a successful part of Toscafund’s portfolios after 2012 as companies shelved expansion plans and started returning capital to shareholders, but that trade had faded by 2015, said Nigel Gliksten, a partner at the fund.

Now though, the sector looks more attractive.

“We’ve gone back into insurance this year. We’ve got (about) 15% weighting in the sector from stocks that we think will benefit from a significant hardening,” Gliksten said, adding that the pandemic had changed pricing levels “meaningfully”.

Share prices have yet to reflect a shift in prospects. A European insurance sub-index is down 25% this year, its worst performance since 2009. Lancashire and RenaissanceRe, two major holdings in Toscafund’s long-short equity fund, still trade at end-May lows, with year-to-date losses of more than 10%.

Funds such as Copper Street Capital are also betting that will change. Its

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