This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Las Vegas Gaming: Let It Roll

Talk about a winning streak.

Big casino companies turned in a record fourth quarter, capping off a year of booming business -- particularly in Las Vegas -- and strong earnings.

Needless to say, then, the stocks have been on a tear. Since late October, when many casino companies reported sparkling third-quarter results, the Dow Jones U.S. Gambling Index has risen 11%, outperforming both the S&P 500 and the Dow Jones Industrial Average. In 2004, the Gambling Index rose 32%, more than three times the gain of the broader market.

With stocks like MGM Mirage (MGG) and Harrah's Entertainment (HET) close to 52-week highs, investors might wonder whether it's time to cash in their chips.

Some analysts are voicing caution that valuations are getting high, notably on MGM Mirage and Las Vegas Sands (LVS - Get Report), which went public in December. They are quick to add, however, that their concerns have nothing to do with the industry's fundamentals, which they view as healthy.

Many others believe, however, that there's plenty of upside left in the stocks; they believe tourism and gambling in Las Vegas will continue to surge, while Harrah's and MGM Mirage realize synergies from their respective acquisitions of Caesars Entertainment (CZR - Get Report) and Mandalay Resort Group (MBG).

"The underlying fundamentals in the Las Vegas market have been strong, with no signs of a near-term slowdown," wrote David Anders, a Merrill Lynch analyst, in a recent research note. "We believe the robust growth in Las Vegas is a function of a better sense of job security among Americans, global travelers flocking to the U.S., owing to favorable exchange rates, and a steady flow of convention business."

The Nevada gaming mecca is crucial to the big operators. In MGM Mirage's case, it accounts for about three quarters of cash flow. In the fourth quarter, Las Vegas' strength offset weakness in the Atlantic City, N.J., market -- the site of a month-long strike -- and helped Harrah's, MGM Mirage and Station Casinos (STN), which cater to the local Las Vegas market, blow past Wall Street estimates.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BYD $14.17 0.00%
CZR $10.02 0.00%
LVS $55.29 0.00%
MBG $27.38 0.00%
WYNN $127.46 0.00%


DOW 17,976.31 +263.65 1.49%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs