Will Casino Stocks Crap Out in 2013?
The second issue with Caesars is they are controlled by a large fund. This is a double-edged sword. While having a say in the company isn't likely to happen soon, the smartest guys in the room are probably from the fund.
Las Vegas Sands
Las Vegas Sands remains my top pick at this time. The combination of U.S., China, and Singapore casinos instills resilience for economic downturns. Interest expense for the rather large debt load continues falling, and there is plenty of time to secure renewed financing as debt comes due. TheStreet'sTimothy Collins recently wrote about LVS volatility Keep an Eye on Volatility. (You need a Real Money Pro account to read it, but Collins' analysis alone makes it worthwhile.)
No need to hurry or rush to the tables though. The current chart pattern is a bearish trend and $30 is the next major support area. I don't expect $30, but $35 is not off the table. September $34 strike put options are attractive at $1 per contract this week. (Read my article Can 'Big Coal' Dig Out of its Hole?.)
LVS Debt to Equity Ratio data by YChartsIf LVS does continue falling and an option writer was exercised, the cost basis for shares is only $33. Selling puts mitigates risk, pays you for your time and if The Sands doesn't fall enough to get exercised the return is 3% for a holding period of 60 days. At the time of publication, the author held no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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