Analyst Rankings: Gambling Stocks' Ride With Lady Luck May Be Over

This week, in our focus on the winning analysts in each industry category from our Analyst Rankings -- Equity 2000, we profile the top analysts tracking casinos and gaming. Next week we'll look at restaurants. (Our last focus was on publishing and printing.)

Judging from the group's performance for the past couple of years, it looks as though the casinos and gaming sector has been a pretty safe bet for investors. Outperforming the S&P 500 by better than 49 percentage points in 2000 and up about 20% so far this year, it's been one of the strongest areas of the market in which to invest.

But Lady Luck may be turning her back on the group, according to our two top-ranked analysts. (Our No. 2 analyst, Lehman Brothers' Stuart Linde, recently switched coverage from gaming to entertainment.) Both No. 1-ranked Jason Ader of Bear Stearns and No. 3-ranked Harry Curtis of Robertson Stephens assert that demand in this industry is driven by new supply, and Las Vegas currently has no new projects on the drawing board. Curtis is the more bearish of the two, summarizing his outlook for Las Vegas operators as "difficult at best." Concerned about how the softening economy, competition from Indian reservations in California and climbing airfares will affect Vegas, he prefers operators that cater to the "locals" rather than to "tourist" markets. ...