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.

Ader expects Las Vegas to see some dropoff in its convention business, given current economic conditions, but believes the Las Vegas strip "is among the most vibrant markets in the entertainment industry." Those companies who control leading properties there will be best-positioned to weather an economic downturn, he contends.

Rather than picking a casino operator, both Ader and Curtis choose

International Game Technology

(IGT) - Get Report

, a manufacturer of slot machines, as their top stock pick. Ader explains, "As the casino business sees slowing revenue trends, the demand for slot machines within casinos continues to grow." With new technologies, including cashless gaming (using tickets instead of coins) and new video products, both analysts believe the company will benefit from an equipment replacement cycle that Curtis projects will last for two to three years.

Casinos and Gaming

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