Go Back   MajorWager Forums > MW - Online Sportsbooks > Stock Talk
Register FAQ Members List Calendar Search Today's Posts Mark Forums Read

Stock Talk Stock tips, opinions and analysis

LinkBack Thread Tools
  #1 (permalink)  
Old 01-04-2005, 09:06 PM
Louis Cypher Louis Cypher is offline
Five Star General
Join Date: Jul 2001
Posts: 27,140
Default Casino stocks: Let them ride?

January 3, 2005: 3:36 PM EST
By Paul R. La Monica, CNN/Money senior writer

NEW YORK (CNN/Money) Taking a gamble on gambling paid off handsomely in 2004. Casino stocks were among the best performers last year.

A wave of consolidation in the sector got Wall Street much so that even the shares of the companies doing the buying moved substantially higher.

Harrah's Entertainment (Research) gained 34 percent and the company it is buying, Caesars Entertainment (Research), soared 86 percent. MGM Mirage (Research) surged 93 percent while the company it is in the process of acquiring, Mandalay Resort (Research), shot up 58 percent.

And in a smaller deal, Penn National Gaming (Research) increased 162 percent while the company it is purchasing, Argosy Gaming (Research), increased 80 percent.

But investors' affinity for Lady Luck wasn't limited to companies involved in mergers.

Shares of Wynn Resorts (Research), which doesn't even have a casino open yet, skyrocketed nearly 140 percent. And Las Vegas Sands (Research), which went public last month, is up 65 percent since the IPO.

(Given the sector's success, it's worth pointing out that the only major casino operator to crap out in 2004 was Donald Trump's Trump Hotels and Casino Resorts (Research), which filed for Chapter 11 bankruptcy in November.)

So with gains like these, should investors start taking some chips off the table? Or should they let it ride?

Betting on a healthy economy and strong earnings

Analysts say that casino stocks still appear to be a good bet.

"You are coming off a banner year and comparisons are more difficult. There's no doubt about that," said George Smith, an analyst with Davenport & Co. "But there appears to be a consensus of 3 percent to 4 percent GDP growth in 2005 and with that backdrop, leisure and recreation companies should have a good year."

According to data from Thomson/Baseline, the average estimated earnings increase for a basket of 10 mid-cap and large-cap casino companies in 2004 was 36 percent and profits are expected to rise another 15 percent, on average, in 2005.

Smith said that in particular, expectations of continued job growth in the United States and lower energy costs bode well for casino operators.

The relatively weak dollar is another plus as it should make travel to the United States more attractive for international tourists.

"Foreign business in Las Vegas has been strong and should remain strong," said Eric Hausler, an analyst with Susquehanna Financial Group.

Finally, valuations for the major casino companies remain fairly reasonable, despite last year's big run. The average price-to-earnings ratio for the basket of 10 casino stocks is 21.5, based on 2005 earnings estimates.

And Daniel Davila, an analyst with Sterne, Agee & Leach, said that he thinks casino stocks should be trading at a multiple that is more in line with that of major hotel and lodging companies. A basket of 11 major hotel stocks, including Marriott International (Research), Starwood Hotels & Resorts (Research) and Hilton Hotels (Research), are valued at an average of 27.1 times consensus 2005 earnings forecasts.

"Gaming companies are less cyclical, have strong growth stories and are better managed than most lodging companies," Davila said.

Five-card stud

So which casino stocks give investors the best odds of a big payday this year? Analysts said that the group as a whole should do well but that investors shouldn't count on as much takeover activity to lift the sector this year. So it will pay to be more discriminating.

"Consolidation will cool down. There aren't as many companies left to buy," said Hausler. "This will be more of a stock picker's market. People are going to have to focus on select quality names."

With all that in mind, the three analysts favor a mix of names, including some of the larger industry consolidators as well some smaller names with strong growth potential.

Davila and Hausler both said that MGM Mirage and Station Casinos (Research) are among two of their favorite picks. Hausler adds that Penn National is also a good bet. Smith also likes Penn National, as well as Harrah's and Aztar (Research).

None of the analysts quoted in this piece own shares of the companies mentioned and their firms have no investment banking ties with the companies.
The most valuable commodity I know of is information
Reply With Quote
  #2 (permalink)  
Old 01-06-2005, 12:56 PM
bazanster2 bazanster2 is offline
Two Star General
Join Date: Jul 2001
Posts: 8,012
Default RE:Casino stocks: Let them ride?


Thanks, we definately have to start keeping tabs about what is happening in the Gaming Stocks sector.
Here's an Index from
Thanks for your continued participation here at Stock Talk" = Major Wager's Gulag" wa,wa,wa.....

best of luck in the coming year,

Reply With Quote
  #3 (permalink)  
Old 01-13-2005, 02:18 PM
Louis Cypher Louis Cypher is offline
Five Star General
Join Date: Jul 2001
Posts: 27,140
Default RE:Casino stocks: Let them ride?


Thank you, and you're very welcome.

A belated Happy New Year to you my friend!

The most valuable commodity I know of is information
Reply With Quote

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On

All times are GMT -4. The time now is 02:42 PM.

Please be advised that if you are wagering over the internet, this is illegal in many jurisdictions. A wagering site may be operating legally at their location but it may still be illegal for you to wager from your location. We suggest you check on the legal situation from any jurisdiction in which you may wager.

Search Engine Optimization by vBSEO 3.0.0 RC6