Casino Stocks Riding High

Casino stocks are near 52-week highs and research reveals that institutional investors are buying the highfliers as Wall Street analysts raise earnings estimates, saying the revenue recovery will only get stronger. But valuations are getting pricey, forcing investors to be a bit more selective about the group.

Bullishness on casino stocks, however, continues to be the prevailing mood. J.P. Morgan analyst Harry Curtis boosted his earnings estimates on Caesars Entertainment (CZR Quote) and MGM Mirage (MGG Quote) Thursday, telling investors that first-quarter results are ahead of expectations. In Curtis' view, Las Vegas results will drive gains in revenue per available room, a key lodging metric known as Revpar.

"Our revised estimate assumes 8% to 9% EBITDA growth in Las Vegas year over year vs. our previous expectations of 2% to 3% growth," said Curtis, noting that fourth-quarter Revpar grew by 7%. "Our call-in surveys suggest 15% rate growth in call-in rates, which we estimate will result in 10% to 11% Revpar growth." ...