On Tuesday MGM Resorts International (NYSE:MGM) shares edged slightly higher after reports emerged suggesting the company had moved closer to receiving approval for the Osaka resorts deal.
The reports followed Monday’s announcement that the company had agreed to purchase Cosmopolitan casino and hotel business from Blackstone Inc. (NYSE:BX) for $1.6 billion.
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The company is planning to develop an integrated resort in Japan, with the latest reports indicating that MGM Japan and its joint venture partner ORIX, were selected by Osaka to be the region’s integrated resort partner.
As a resort, MGM’s proposed $10 billion world-class resorts will likely receive approval from the municipal government.
Is it time to invest in MGM Resorts stock?
From an investment perspective, the creation of integrated resorts in Japan presents an exciting future for MGM in the country. However, proceeds from this investment are not due until a few years down the line.
Moreover, MGM shares seem to be trading at a steep forward P/E ratio of about 41.40, making the stock less attractive to value investors.
Therefore, although the company presents a compelling long-term investment opportunity amid its expansion in Japan, investors could look for alternatives in the short-term
MGM shares seem to be approaching overbought conditions
Technically, MGM shares appear to be trading within an ascending channel formation in the intraday chart. As a result, the stock price has rallied closer to the overbought conditions of the 14-day RSI.
Therefore, with shares also closer to retesting the trendline resistance, a pullback could be imminent.
Investors could target downward profits at approximately $43.22 or lower at $41.20. On the other hand, if the stock continues to gain, moving deep into overbought conditions, it could find resistance at $47.24 or higher at $49.17.
Good time to take some profits
In summary, MGM shares have rallied more than 52% this year. Moreover, the stock has recently spiked to new 13-year highs, creating an opportunity for a pullback.
Therefore, with the stock trading at steep valuation multiples, it could be time to take some profits from your MGM shares.
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