By Alex Berenson
Staff Reporter

Efficient market? Not always.

On May 7,

The Street

ran a bullish

story on

Anchor Gaming

(SLOT)

, arguing that a selloff that had taken the stock from 70 to 27 in nine months was unwarranted. The next day, the stock began an amazing move. By May 15, Anchor traded at 39 5/8. It has bounced between 40 and 43 ever since and closed Wednesday at 42.

That's a 57% gain in a month.

So did Anchor announce new products, post unexpectedly high earnings or otherwise change its fundamentals to earn a higher price? No, says independent casino industry analyst Alan Woinski.

But a rumor that gained ground after

The Street's

story that casino giant

ITT

(ITT) - Get Report

might be interested in Anchor spurred investors to take a second look, and they liked what they saw.

"They're a really good company -- it's just that the stock has a tendency to rise too much and fall too much," Woinski says.

With last month's run-up over, Anchor is much closer to fair value, Woinski says. At its current levels, factoring out a $5-per-share cash cushion, Anchor trades at about 15 times trailing earnings and 12 times expected earnings in fiscal 1998. In this market, that's not expensive, but it isn't absurdly cheap either given the competitive pressures the company faces, Woinski says.

Other analysts are more bullish, with Daniel Davila of

Rodman & Renshaw

saying fair value for the company could be as high as the mid-50s. Rodman & Renshaw has done no recent underwriting for Anchor.

"I think the company should be valued at 45," Woinski says. He adds, "That doesn't mean it will stop at 45." Indeed.

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