This week’s stock analysis is Caesar’s Entertainment, Inc. (CZR).
Harrah’s Entertainment (later named Caesars Entertainment Corporation, previously The Promus Companies) was an American casino and hotel company founded in Reno, Nevada, and based in Paradise, Nevada, that operated over 50 properties and seven golf courses under several brands. In 2013, it was the fourth-largest gaming company in the world, with annual revenues of $8.6 billion. It was acquired in 2020 by Eldorado Resorts, which then changed its own name to Caesars Entertainment. Caesars’s largest operating unit filed for Chapter 11 bankruptcy protection in 2015.
CZR is a stock that is very popular with investors and hedge funds. The company is scheduled to release its next quarterly earnings announcement on May 10th, 2021. The company reported a loss of ($13.52) earnings per share for the most recent year. These losses were attributed to as high debt load, the economic lockdown, and the pandemic.
The business has a market cap of $19.297 billion and on average trades 3.3 million shares a day.
The last five years has been a wild ride for CZR shareholders. The company went public, took on a huge amount of debt, left its largest operating unit bankrupt, and eventually merged with Eldorado Resorts to make one of the biggest gambling companies in the world. Since the stock was severely crushed last March, analysts see that as the world returns to normalcy CZR will have very promising prospects.
In a nutshell the “buzz” for casino stocks today is about their opportunity to dominate the online gambling niche which is expected to be legalized internationally in the next few years. Caesars recently acquired William Hill, the company’s partner for online gambling in the U.S. William Hill brings the software and iGaming expertise that Caesars didn’t have in-house, and this is expected to be big business long-term.
The expectation is that Caesars and William Hill will be leaders in the online gambling market. So, this narrative for CZR is that a return to normalcy will boost the stock as online gambling holds very promising prospects. Should that narrative change, so will the company’s stock price. It is carrying a huge debt load of $16.2 billion and last year only earned $463 million in adjusted earnings. Fundamentally this debt load is very negative and is keeping value investors away from the stock. But the narrative is serving as a powerful tailwind which could drive prices much, much higher.
Based on 12 analysts offering 12-month price targets for Caesar’s Entertainment in the last 3 months, the average price target is $102.83 with a high forecast of $134.00 and a low forecast of $90.00. The average price target represents a 12.61% increase from the current price of $91.71. Power Traders like to see this wide divergence in opinion among analysts as it creates great trading opportunities when the artificial intelligence creates a trend forecast.
Over the last 52 weeks CZR has traded as high as $106.20 and as low as $14.62. This provides us with an annual trading range of $91.58. When we divide this metric by 52 weeks, we can determine that the average weekly trading range for CZR is roughly $1.76. We refer to these as the common-sense metrics which we use as baseline measurements of understanding normal value. When using artificial intelligence, we look to amplify our returns based upon these baseline measurements.
Whenever we trade, we always pay attention to where we are in relation to the 52-week trading range. It is very common to see the 52-week high provide very strong resistance to the market until it is breached. Often when the 52-week high is breached we will see the stock price explode higher very quickly over a very short period of time.
Below is the chart of CZR over the past two years. Notice how until recently simply trading a breach of the 52-week high would see profits accumulate very quickly. Most recently CZR encountered resistance at its most recent 52 week high at 106.20 and slid BELOW its previous 52-week high boundaries. This is a clear indication that the stock is seeking to find an area of support. Over the last 52 weeks CZR is up 470% or $77.41 per share.
The stock was crushed during the economic lockdown and pandemic. After the huge selloff in March, it has recovered primarily on the theme that when normalcy and a reopening occurs Caesar’s underlying business will prosper. From a pure fundamental standpoint, the stock had a horrible year in terms of generating revenue. As a matter of fact, its huge rally in August 2020 just as it was reporting an 80% decline in revenue.
Whenever we look at a stock forecast, we always are comparing what the stock has done, to the artificial intelligence, which is computing its forecast based upon a proprietary intermarket analysis of the most closely correlated assets as well as a neural network analysis. The key to the Vantagepoint analysis is the predictive blue line. The slope and general direction of the blue line determines the medium forecast for the market.
The Vantagepoint Software has three separate modules which create a forecast for a Power Trader. They are the predictive blue line, the Neural Net, and the Intermarket Analysis.
The software focuses on the daily price action. You’ll see that there is a black line and also a blue line right up against the price data on the chart.
The black line that you see that is a regular simple 10 period moving average. A very common technical indicator. It gives us an indication of where market prices have been over a given period of time. But obviously as traders we really need to understand is where our market price is moving going forward.
So, what we want to do is compare that black line value on the chart to the predictive blue line, which is VantagePoint’s predictive indicator.
The predictive blue line is the navigation system. Its slope and direction determine the initial short-term forecast. Whenever the blue line crosses above the black line an UP opportunity is created. Whenever the blue line crosses below the black line a DOWN opportunity is created.
The predictive blue line looks at patterns and relationships to understand what’s driving the future price of the market that you might be trading. It’s generating future price predictions of where prices are likely to move. Utilizing those predictions it constructs these indicators that you see against the charts turning what was a lagging tool, into a forward-looking predictive tool.
So, whenever we have this blue line crossing above the black line, it’s really suggesting average prices are expected to start moving higher and you therefore would likely look for long positions in the market.
The Vantagepoint A.I. Analysis
The predictive blue line utilizes that Vantagepoint patented Neural Network and Intermarket Analysis to arrive at its value. It looks at the strongest price drivers of an asset through artificial intelligence and statistical correlations to determine its value.
Power traders use the predictive blue line in helping to determine both the value zone as well as the trend direction.
Observe how the SLOPE of the predictive blue line started moving higher on 2/17/21 and on 2/19/21 crossed above the black line at a price of $83. Over the next 18 trading sessions CZR moved up over $17 per share. There were numerous opportunities to purchase it lower, in the value zone and sell it above the daily projected high price for a quick swing trade.
Likewise, on 3/16/21 the slope of the predictive blue line began to fall. On 3/18/21 at a price of $90.60 per share a DOWN forecast was created and prices tumbled over $10 per share in the next 5 trading sessions.
And if you look at the very right-hand side of the chart, you’ll see that there is what we call a predicted shadow candle. That’s a predicted high and a predicted low for the next trading day. So, you get an overall trend prediction, short-term strength or weakness, and this predicted high and low.
So, you have these separate neural networks really doing all of this and looking at these different sorts of timeframes and making the most robust indicator possible.
Fine Tuning Entries with The Neural Net Indicator
At the bottom of the chart is the Neural Network Indicator which predicts future strength and/or weakness in the market. When the Neural Net Indicator is green it communicates strength. When the Neural Net is Red it is forecasting short term weakness in the market.
We advocate that Power Traders cross reference the chart with the predictive blue line and neural network indicator to create optimal entry and exit points. The Neural Net helps traders fine tune their timing for their entries and exits. Study the chart below and you will see that the predictive blue line combined with the Neural Net is a powerful combination for positioning when an opportunity arises.
Power Traders are always looking to apply both the neural network and A.I. to the markets to find statistically sound trading opportunities.
In summary, the trend on CZR turned up on 4/1/21 at $88.94 a share. Prices have surged as much as 6% since that forecast and the trend remains firmly UP. Traders have had one opportunity to purchase CZR at or below the predictive blue line. Power traders are looking to purchase weakness close to the daily predictive lows as we anticipate that the stock will most likely challenge the recent highs at $106.20 within the next few weeks.
Intermarket Analysis
What makes Vantagepoint unique and distinct when compared to all other analytical tools is its patented and proprietary intermarket analysis.
Intermarket analysis is a method of analyzing markets by examining the correlations between different asset classes. In other words, what happens in one market could, and probably does, affect other markets, so a study of the relationship(s) is often very helpful to a trader.
Studying the charts can always provide objective realities in terms of locating support and resistance levels which become very clear on a chart. But we live in a global marketplace. Everything is interconnected. The billion-dollar question for traders is always what are the key drivers of price for the underlying asset that I am trading?
These intangibles are invisible to the naked eye yet are responsible for driving prices. These markets show very high statistical correlations.
Instead of looking at financial markets or asset classes on an individual basis, intermarket analysis looks at several strongly correlated markets, or asset classes, such as other stocks, currencies, ETF’s and commodities. This type of analysis expands on simply looking at each individual market or asset in isolation by also looking at other markets or assets that have a strong relationship to the market or asset being considered. The Vantagepoint software analyzes the top 31 drivers of an assets price.
There is great value to be had in studying and understanding the key drivers of CZR price action. We advise Power Traders to look at Intermarkets of other casino stocks and properties to uncover different opportunities which are only available through this type of correlation analysis.
Our suggestion – The consensus of analysts’ opinions shows that CZR is undervalued at its current price of $97. The high-end estimate over the short term is $134. The all-time high is $106.20. Power Traders are in at lower prices and are placing their protective stops below the bottom of the predictive low channel. CZR is a great swing trading stock. We think momentum moves this asset higher over the next few weeks and will test its most recent 52 week high at $106.20. This OPINION is always cross referenced against the seniority of the artificial intelligence forecasts.
We have it firmly on the radar and look to buy weakness as long as the A.I. forecasts remain UP.
Follow the A.I. trend analysis and practice good money management on all of your trades. CZR deserves to be on your trading radar.
When online gambling becomes legal across the board, we think casino stocks will experience very explosive moves.
Let’s Be Careful Out There!
Remember, It’s Not Magic.
It’s Machine Learning.
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