Time To Bet On Casinos… Again

Almost two months ago we wrote two articles on the valuations in Casino stocks MGM Mirage (NYSE:MGM) Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN). Since then, prices have more than doubled and subsequently pulled back.

Their stock prices are resting close to the April levels we talked about in “Doubling down on Casinos” and “Bank Pullback Exposes Casino Opportunities.”

To say casinos have been on a roller coaster lately doesn’t begin to tell the whole picture. Casinos have been dealing with news of lowered traffic at Las Vegas, questionable Macau circumstances, refinancing and debt issues and a laundry list of other economic negatives.

But unlike GM or Chrysler, and perhaps the most important thing to take away from all of these tribulations, is the fact that these companies should survive. They have emerged from the worst parts of the recent storm and they will continue on.

Does that mean they’ve all emerged unscathed? No. But the fact that they have emerged is important. Because if you were to look back in 2 years without having purchased these companies you might very well be kicking yourself.

And even if you’re not interested in a two-year holding period, it took these companies a little over a month to double. We could see this exact pattern a few times before 2010. And I wouldn’t mind another 100% return (or two) before the end of the year…

Symbols mentioned in this article: MGM, LVS and WYNN.

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