Now would a good time to Short shares of Wynn Resorts (NYSE: WYNN). A perfect storm of unfavorable factors -- visa restrictions, the global recession, increased competition, and a crack-down on needless corporate and related business travel, do not bode well for WYNN. Other negatives: Las Vegas is in a pronounced recession, the typical American is scaling-back domestic travel, and more retirees are feeling an income squeeze as companies cut or eliminate dividends. The First Call FY 2009/FY 2010 EPS estimates for WYNN are 27 cents to 63 cents.
Wynn Resorts is cutting costs, but the action won't be enough to prevent likely, substantial reductions to revenue and earnings guidance, and technically, WYNN's chart is confirming this, giving strong indications of being a bear hug.
Stock Analysis: Wynn Resorts is a moderate-risk stock. Consider selling a 25% position in WYNN now; then sell another 25% in three months, if U.S. and global economic conditions don't improve substantially. Under any circumstance, don't Short more than 50% of your WYNN position in the first half of 2009. Buy/Stop Loss if you were to sell shares in this company: $53. Cover your short on a bounce off of $20 or $15.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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