Published On: Sat, Feb 2nd, 2013

Play to win with Casino Stocks

Stock Analysts like to pick winners for their clients. In the context of the downturn where many stocks are doing badly, it becomes important for the investor community to be apprised of emerging winners and those with a potential to return steady earnings. This is especially true of those stocks that are considered penny stocks but have the future prospects for growth. Since many Americans consider Las Vegas a pilgrimage site that is akin to a pot of gold, it makes sense to evaluate the Casino Stocks that are currently trading at a discount but have the potential for good returns. Among the prominent casino stocks are Caesars, Las Vegas Sands, MGM, and WMS. These stocks represent the premium casinos in Vegas and in other gambling hotspots. Indeed, if the recent trends are anything to go by, it is a good time to invest in these stocks.

Compared to the mainstream stocks of blue chip companies, these stocks might look like risky and unstable. However, do not be fooled by the valuations alone as they are trading at a good discount to the premium. Consider for instance, Caesars, it is trading at 94 cents below its IPO price of $9 a share. If its cash flow projections were anything to go by, it would certainly trade at a premium over its IPO price. In addition, with the recession not having a noticeable impact on casinos, one can be assured that the roulette is spinning to gain. Next, MGM is another undervalued stock that promises a better show this year. It was up 17 cents this week and with a price of $13, it looks like it is a good investment.

With the Federal Government opening more reservations (the places where casinos are not outlawed), it is a fair guess to say that the Casinos would have the potential for business in the coming years. The fact that these casinos are not confined to Vegas or Atlantic City alone should make the investors research these stocks in a detailed manner. All things being equal, the chances of Casinos like the ones cited here going out of business seems remote. Hence, it is worth the wait for these stocks as a longer-term investment. Moreover, with the psychological boost that the recent rally on the Dow (that has now crossed 14000, a level not seen since October 2007), these casino stocks are sure to be carried forward in the momentum and it is the case that they would be bumped up as well.

Finally, if you have moral qualms about investing in Casino stocks, remember that these stocks represent companies that are totally legit and legal and that they follow all the legal requirements that need to be complied with. There is no reason to suspect that these companies are anything less respected than mainstream stocks. Start investing in these stocks and you would be playing to win on the table with all hands ready to get you hooked.


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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.