| Hey there, savvy investors! This week, I'm bringing you two stocks that are showing green shoots while everyone's focused on the weeds – one's a Vegas casino giant thriving despite tourism collapse, and the other's a Chinese insurtech that nobody's paying attention to. Let's dive in. MGM Resorts (MGM): Finding Growth Where Others See DoomLas Vegas is dying, right? Tourist arrivals down 7.6% year-to-date. Occupied room nights down 6.2%. Wall Street Journal writing obituaries. Everyone piling on the "Vegas Death Spiral" narrative. Except MGM just posted 2% revenue growth in Q3 despite all of that. How? The diversification strategy nobody appreciates: When Vegas stumbles, MGM China steps up. When one region underperforms, another compensates. That's exactly what happened in Q3 – Macau gains offset Vegas weakness, and BetMGM's digital business threw off $41M in EBITDA (versus a loss last year). The reality check on Vegas: Yes, EPS dropped from $0.54 to $0.21 year-over-year. Yes, they took a $285M sunk loss from withdrawing from the New York casino bid. But here's what the doomsayers are missing – Vegas isn't dying; it's just overpriced and needs events. Proof? The F1 Grand Prix. 150,000 extra visitors. Record betting numbers. MGM fully booked. This proves events remain Vegas's lifeblood. When you give people a reason to come (beyond expensive buffets), they show up. The catalysts nobody's talking about: - Osaka mega-project: MGM just announced hiring 12,000 employees for their $8.1B casino partnership with Orix Corporation in Japan. Forecast: $3.4B in annual revenue with a 2030 opening. That's a monster growth driver.
- BetMGM's breakout: $667M in Q3 revenue with positive EBITDA. The digital business is finally profitable and positioned for NFL playoffs and beyond.
- China strength: While everyone panics about Vegas, MGM's Chinese operations are compensating for the weakness.
The setup: MGM hit $40 in February before the New York withdrawal tanked sentiment. Now at $35, it's recovered from the depths and showing early signs of momentum. The stock trades at just 14.6x P/E for a diversified global gaming operator. My take: By Q2 2026, I see MGM in the $38-45 range as Vegas recovers, BetMGM grows, and Osaka progress validates the international expansion. The market hated this stock for valid reasons, but the seeds of recovery are sprouting everywhere if you look. Waterdrop (WDH): The Chinese Insurtech Nobody's WatchingHere's a stat that'll blow your mind: 480 million people in China (33% of the population) have used Waterdrop's crowdfunding platform to donate money for medical treatments. That's one-third of the country already in their ecosystem. And yet, this stock trades at a $600M market cap like nobody cares. The Q3 numbers that changed everything: - Revenue up 24% year-over-year (11% on a TTM basis in USD)
- Earnings up 36% quarter-over-quarter
- First-year premiums up 80% year-over-year (mostly new clients)
- New product for pre-existing conditions contributed $43M (9% of volume)
The business model that's brilliant: Waterdrop has two segments. The crowdfunding platform (8% of revenue, operates at a loss) acquires prospects. Then they convert those prospects into insurance customers (88% of revenue, highly profitable). It's customer acquisition disguised as charity. The AI implementation that's driving growth: Their models now detect 15 high-risk fraud scenarios, maintaining platform trust. More importantly, AI-powered matching converts 50% better than traditional ads. Their AI customer service agent (launched in March) is scaling rapidly, preventing manual bottlenecks. The secular growth story: Industry projections range from 13% CAGR (traditional insurance) to 54% CAGR (insurtech) through 2030. Waterdrop's growing at 24% and just starting to monetize that massive crowdfunding user base. The shareholder returns: They're buying back $50M worth of shares (8.3% of market cap) through September 2026, plus paying a 3% dividend yield. That's 11% in annual capital returns while growing 24%. The valuation that makes no sense: Forward P/E ratios tell the story: - FY 2025: 10.3x
- FY 2026: 8.5x
- FY 2027: 6.3x
Using a residual income model with conservative assumptions (13% earnings CAGR), I see 30% upside over the next 12 months. If they sustain recent growth trends, the upside could be 43%. The risks you can't ignore: - Regulatory pressure: China Banking and Insurance Regulatory Commission controls everything – data privacy, commission caps, product suitability
- Competition is brutal: Ant Group (Alibaba), Tencent's WeChat Pay, and Ping An Insurance all have massive distribution advantages
- Commission dependency: They don't underwrite policies; they just sell them. Insurance partners could cut rates or go direct to consumers
Plus the liquidity issue: This ADR only trades about $569K daily. Don't trade more than 5-10% of that volume unless you want to move the market yourself. My take: This looked like a hold at first – trading at historical average P/B, facing regulatory headwinds and fierce competition. But that Q3 acceleration changed my mind. If they can sustain even half this growth while converting their massive crowdfunding user base, this stock is criminally cheap. The Week Ahead: What to WatchFor MGM: Monitor Vegas tourism data and any F1-related commentary. Also watch for updates on Osaka project milestones and BetMGM growth during NFL season. For Waterdrop: December 3rd earnings (pre-market) – analysts expect $120M revenue and $0.04 EPS. Watch for commentary on sustained monetization of the crowdfunding platform. Recovery and Growth: Two Paths to ProfitsHere's what I love about this pairing: both are misunderstood by the market. MGM is trading like Vegas is dead when the reality is they're a diversified global gaming operator with digital growth, China strength, and a massive Japan catalyst. At 14.6x earnings with multiple growth drivers, this isn't expensive. Waterdrop is trading at barely 6x 2027 earnings for a company growing 24% with 33% of China already using their platform. Add 11% in buybacks/dividends, and you're looking at serious total return potential. My strategy: Use MGM as your "Vegas recovery plus international expansion" play with downside protection from diversification. Use Waterdrop as a small speculative position on Chinese insurtech growth (emphasis on small given liquidity risks). One's established gaming with new growth vectors. One's emerging insurtech with massive user base. Both are showing recovery while the market focuses on the negative headlines. Which recovery story speaks to you? The diversified casino operator or the Chinese insurtech nobody's watching? Let me know! BIGGEST BLACK FRIDAY DEAL OF THE YEAR FBT ALL-ACCESS BUNDLE - 90% OFF Get EVERY product. ONE insane price. THE COMPLETE BUNDLE: - Dark Cloud Reversal
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