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MGM's (NYSE:MGM) Q1 results and a breakdown of key support could create a great buying opportunity.

The first quarter saw a poor hold at both the wholly owned strip properties and CityCenter, affecting the company's results. Also, a large number of rooms were offline for renovation at MGM Grand. Some of those room nights where likely shifted to "core" properties at a lower rate. Furthermore the company was facing tough comps with this being an off year CONEXPO in Las Vegas.

Even with these setbacks, MGM and Las Vegas are still on the path to recovery and the business is seeing several of positive trends. Visitor volume to Las Vegas is expected to past peak levels this year and the convention business continues to come back. The new terminal opening next month at McCarran Airport should lead to more international flights to Las Vegas. MGM's capex programs in Las Vegas have keep their properties competitive in the marketplace.

Two potential major catalysts for the stock this year are the approval of MGM Cotai and online gaming in the US. Wynn (NASDAQ:WYNN) getting their Cotai land grant clears the way for MGM. Macau has said they will approve two of three land grants this year, and MGM could be the other one. Macau is seeking more diversity their economy, and the fact that MGM is the only operator with just one casino, and MGM has worked closely with the government in developing their plans leads me to believe MGM Cotai will be next casino development approved. In online gaming MGM has a chance to be a leader here and they will launch a social online gaming platform next quarter that could easily add cash games when online gaming is approved.

Another possible upside to the stock is improvements at CityCenter. The market is not looking for anything good from CityCenter, and with casino volume down in Q1 the bar for CityCenter will be even lower. However Crystals and Vdara both had great quarters and should continue to see growth. In the back half of the year Aria will be getting a new show. I believe this could add $15 million a year to EBITDA directly and improve volumes in the casino and restaurants as well. Also new restaurants, signage, and improved pedestrian access into Aria should help drive increases in F&B and casino revenues.

Entry

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With MGM's earning miss on May 3rd, and the weak jobs report on May 4th, a favorable entry price in MGM could be near. The strong uptrend the stock started in mid December and took MGM from $9 to almost $15 a share, until it broke down below that trendline in mid February. MGM then started to consolidate throughout March and April with support around $13.05, and broke below that level with the May 3rd close at $12.92, and confirmed that move lower with a 4% move down on May 4th. Furthermore if MGM does not find support around $12 I think you could look to get in around $10.50.

Source: MGM Sell-Off Could Be A Buying Opportunity