MGM Stock Correction Could Be Buying Opportunity, According to Charts

Once-hot MGM Resorts International (NYSE:MGM) carry is mired in a slump. But if historical trends repeat, the recent coast could shew to live a purchasing opportunity.

Shares of the largest operator on the Las Vegas Strip are away 1.11 percent today, extending the hebdomadary correct to 4.67 percent. MGM is shoot down 12.21 percent from its latterly countersink 52-week high. group A tieback of at to the lowest degree 10 percent for any caudex is considered a correction. The recent weakness in MGM stock has the name hovering around its 40-day moving middling — a technological indicator from which the shares experience previously rallied.

According to information from Schaeffer’s Senior Quantitative Analyst Rocky White, sixer similar signals have got occurred in the past times threesome years. MGM Resorts stock enjoyed a positive take one-month bring back inward 50% of those cases, averaging a 3.3 percent gain,” notes Schaeffer’s Investment Research.

Should that story repeat, shares of the Bellagio operator could reclaim previous highs.

Catalysts for MGM Stock

With third-quarter earnings in the bag, other underlying catalysts demand to emerge for MGM shares to full complement the aforementioned technological trends.

While zilch is guaranteed inwards financial markets, MGM has some levers to pull o'er the near-term to potentially juice the shares. Notably, the accompany latterly proclaimed plans to sell operating rights to the Mirage. At to the lowest degree ane psychoanalyst forecasts that deal could bring $500 billion to $600 million. If the transaction is proclaimed o'er the near-term and comes in at the upside remainder of that mountain chain or exceeds it, the stockpile could catch a lift.

Additionally, MGM could deploy some of its warfare chest inward ways that could prop up the stock. At the death of the 3rd quarter, the cassino operator had $5.6 billion in immediate payment and cash equivalents, and there’s to a greater extent coming by way of previously announced, pending transactions.

Uses of that hard cash could include shareholder rewards, such as increasing buybacks or boosting the scant yearbook dividend of a penny a portion out per year. On the recent third-quarter earnings group discussion call, CFO Jonathan Halkyard said reverting cap to investors is an idea that’s on the table. But he didn’t say if that will include buybacks, dividends or both. Nor did he reveal a time line of business for those actions.

Other Potential Sparks

As Schaeffer’s notes, psychoanalyst upgrades could potentially live catalysts for MGM shares. Nine analysts currently handle the identify – pentad of which rate it “hold” or worse. Some other technological factors could alleviate a rallying by the stock.

The consensus toll mark on the carry is $55.17, or 21.4 percent above the Nov. 11 close.

“It’s also worth noting that the security’s Relative Strength Index (RSI) of 38 is nearing ‘oversold’ territory, despite its recent positive terms action. This means a short-term tonic could follow rightfulness on the horizon,” adds the research firm.