Casino Stocks Often Swoon in June

With 18 trading days left in June after today, there is still a lot to be ascertained about the monthly performance of the overall market. However, if past trends continue, this month might be difficult for casino stocks.

Three casino stocks are among the 25 S&P 500 companies that have underperformed during the last ten Junes, with Wynn Resorts (NASDAQ: WYNN) being the worst performer of the three in the sixth month of the year.

"According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, Wynn Resorts is the third worst stock on the S&P 500 Index (SPX) to own in June, looking back over the past 10 years. The shares averaged a loss of 3.1% for the month over the last decade, and finished the month lower seven times,” noted Schaeffer’s Investment Research.

Wynn is the S&P 500's poorest performer in the sixth month of the year, based on median June returns for the previous ten years.

A Fascinating Seasonal Pattern for Casino Stocks

Regarding the seasonal patterns observed in June, there is an intriguing component. Although the summer travel season begins on Memorial Day, June is usually a poor month for travel and leisure stocks.

In the sixth month of the year, cruise line Royal Caribbean Group (NYSE: RCL) and travel booking website Booking.com (NASDAQ: BKNG) joined Wynn as the three worst offenders in the S&P 500. June's worst-performing stocks over the last ten years also include two other pure-play travel and leisure businesses.

One could argue that this weakness is a sign of market efficiency and evidence that commonplace investment theories—like purchasing stock because of higher summertime casino attendance—aren't always supported. Indeed, those perspectives are punishable.

The energy sector's historical weakness throughout the summer is another illustration of that trend. Conventional energy stocks frequently underperform in the late second and early third quarters, despite the fact that it is well known that demand and prices for gasoline rise as the summer travel season gets underway.

Caesars, MGM June Stock Offenders at Casinos, Additionally

MGM Resorts International (NYSE: MGM) and Caesars Entertainment (NASDAQ: CZR) are among the worst-performing S&P 500 stocks in the sixth month of the year, confirming that the expectation that Las Vegas Strip and other casino visits will increase in June does not necessarily translate into equity upside.

According to Schaeffer's, over the previous ten years, the average June losses for MGM and Caesars, the two biggest operators on the Strip, were 0.95% and 1.72%, respectively.

With a median June loss of 3.61% during the previous ten years, Caesars is currently the second-worst S&P 500 company, after Wynn.