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3 Leisure Stocks Driving The Industry Higher

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 100 points (0.6%) at 16,838 as of Thursday, June 5, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 2,349 issues advancing vs. 623 declining with 153 unchanged.

The Leisure industry as a whole closed the day up 0.9% versus the S&P 500, which was up 0.6%. Top gainers within the Leisure industry included Lakes Entertainment ( LACO), up 6.0%, Luby's ( LUB), up 8.6%, Asia Entertainment & Resources ( IKGH), up 1.6%, Rick's Cabaret International ( RICK), up 2.4% and Monarch Casino & Resort ( MCRI), up 5.3%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Asia Entertainment & Resources ( IKGH) is one of the companies that pushed the Leisure industry higher today. Asia Entertainment & Resources was up $0.05 (1.6%) to $3.24 on average volume. Throughout the day, 85,834 shares of Asia Entertainment & Resources exchanged hands as compared to its average daily volume of 88,100 shares. The stock ranged in a price between $3.10-$3.24 after having opened the day at $3.17 as compared to the previous trading day's close of $3.19.

Iao Kun Group Holding Company Limited, through its subsidiaries, promotes VIP gaming rooms in Macau, the People's Republic of China. Its VIP gaming rooms are located in City of Dreams Hotel & Casino, Sands Cotai Central, StarWorld Hotel and Casino, Galaxy Macau Resort, and Le Royal Arc Casino. Asia Entertainment & Resources has a market cap of $184.1 million and is part of the services sector. Shares are up 3.6% year-to-date as of the close of trading on Wednesday. Currently there are 3 analysts who rate Asia Entertainment & Resources a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Asia Entertainment & Resources as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from TheStreet Ratings analysis on IKGH go as follows:

  • The revenue growth greatly exceeded the industry average of 6.0%. Since the same quarter one year prior, revenues rose by 28.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • IKGH's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, IKGH has a quick ratio of 2.01, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to its price level of one year ago, IKGH is down 27.50% to its most recent closing price of 3.19. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, IAO KUN GROUP HOLDING CO LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for IAO KUN GROUP HOLDING CO LTD is rather low; currently it is at 17.22%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.97% significantly trails the industry average.

You can view the full analysis from the report here: Asia Entertainment & Resources Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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