It may not be a solar ETF, a biotech fund or an ETF with exposure to a slew of richly valued Internet stocks, but the Market Vectors Gaming ETF (NYSEArca: BJK) has been on its own almost unstoppable run this year.
While a year-to-date gain of 34.4% is not enough to rank BJK among the 10-best non-leveraged sector ETFs, that run is undoubtedly impressive. More importantly, each fresh high made by BJK, such as the one notched by the ETF on Tuesday, is not just a new 52-week high. It is a new all-time high. [Gambling ETF Surges]
Ebullience surrounding BJK is not lacking merit. Actually, sell-side momentum is building for some of the ETF’s marquee constituents. Last week, J.P. Morgan had this to say about Macau, the market that is the driving force for BJK, according to Barron’s:
“We have been impressed with its mass market growth (+33% YTD) and overall resiliency in the face of mixed China macro for much of 2013. With China macro (GDP, PMI, exports data) improving, planned infrastructure improvements, and a favorable demand-supply dynamic for some time to come, we think estimates and multiples can move higher from here.”
The bank has buy ratings on the major Macau players such as Las Vegas Sands (NYSE: LVS), MGM (NYSE: MGM), Melco Crown (NasdaqGM: MPEL) and Wynn Resorts (NasdaqGM: WYNN). Those stocks combine for over 20% of BJK’s weight.
Including Tuesday’s 0.7% gain, BJK is up 3.6% since the start of this month, well above the returns offered by the S&P 500 and broader consumer discretionary ETFs over the same time. The fundamentals are there to support further near-term upside for BJK. [No Craps for Gaming ETF]
“Gaming revenues in the first 14 days of October imply MOP35.5- 36.5bn for the month, or up ~28-31% YoY vs. consensus of ~18-22%. Mass headcount and play levels remain strong, which we think should continue. We estimate mass table revenues could be up 45-47% YoY for the month, which is just above recent trend of 30-32%. We estimate VIP revenues could be up 22-27% for the month, according to a Nomura note posted by Barron’s. RBC Capital Markets estimates Macau gaming revenue will rise 28%-30% this month on a year-over-year basis, reaching a new record.
Good news for an ETF that allocates more than 24% of its weight to China, which really means Macau. Three of BJK’s top-10 holdings are direct Macau plays.
Market Vectors Gaming ETF
ETF Trends editorial team contributed to this post.