Talk about a winning streak.

Big casino companies turned in a record fourth quarter, capping off a year of booming business -- particularly in Las Vegas -- and strong earnings.

Needless to say, then, the stocks have been on a tear. Since late October, when many casino companies reported sparkling third-quarter results, the Dow Jones U.S. Gambling Index has risen 11%, outperforming both the S&P 500 and the Dow Jones Industrial Average. In 2004, the Gambling Index rose 32%, more than three times the gain of the broader market.

With stocks like MGM Mirage ( MGG) and Harrah's Entertainment ( HET) close to 52-week highs, investors might wonder whether it's time to cash in their chips.

Some analysts are voicing caution that valuations are getting high, notably on MGM Mirage and Las Vegas Sands ( LVS), which went public in December. They are quick to add, however, that their concerns have nothing to do with the industry's fundamentals, which they view as healthy.

Many others believe, however, that there's plenty of upside left in the stocks; they believe tourism and gambling in Las Vegas will continue to surge, while Harrah's and MGM Mirage realize synergies from their respective acquisitions of Caesars Entertainment ( CZR) and Mandalay Resort Group ( MBG).

"The underlying fundamentals in the Las Vegas market have been strong, with no signs of a near-term slowdown," wrote David Anders, a Merrill Lynch analyst, in a recent research note. "We believe the robust growth in Las Vegas is a function of a better sense of job security among Americans, global travelers flocking to the U.S., owing to favorable exchange rates, and a steady flow of convention business."

The Nevada gaming mecca is crucial to the big operators. In MGM Mirage's case, it accounts for about three quarters of cash flow. In the fourth quarter, Las Vegas' strength offset weakness in the Atlantic City, N.J., market -- the site of a month-long strike -- and helped Harrah's, MGM Mirage and Station Casinos ( STN), which cater to the local Las Vegas market, blow past Wall Street estimates.

Anders maintains buy ratings on both Harrah's and MGM Mirage, and his 12-month price targets on the stocks -- $80 for Harrah's and $83 for MGM Mirage -- remain significantly higher than the stocks' recent levels around $66 and $76, respectively. (Merrill Lynch does and seeks to do business with companies covered in its research reports.)

The continuing Las Vegas boom prompted Anders to significantly increase earnings estimates for MGM Mirage. His 2005 EPS forecast is now $3.05, up from $2.89, and he lifted his 2006 estimate to $3.77 from $3.56. The average Wall Street estimates are $2.73 for 2005 and $3.36 for 2006, according to Thomson First Call.

"We expect MGM to continue to benefit from increased Las Vegas visitation in the first quarter and ultimately in the second quarter, as the opening of Wynn should drive leisure travel," Anders wrote. "In addition, the convention calendar remains firm."

Anders was referring to the ultra-luxurious flagship Wynn Resorts ( WYNN) casino, which is set to open at the end of April. Visitors curious to see the new resort may also bring business to other Las Vegas addresses.

Meanwhile, Anders' counterpart at Bear Stearns, Joseph Greff, is big on Harrah's. This week, Greff raised his price target on the stock to $82 from $80 and reiterated his outperform rating. (Bear Stearns does and seeks to do business with companies covered in its research reports.)

In a research note, Greff said that Harrah's currently trades around 7.9 times his 2006 pro forma EBITDA estimate, or earnings before interest, taxes, depreciation and amortization, "a compelling value in our view."

Greff also believes Harrah's acquisition of Caesars will be a winner. "Harrah's stronger operating model should generate improved operating results for the traditionally underperforming Caesars' properties," he wrote. "There should be meaningful cost savings over time as well. Importantly, Harrah's gains an immediate, additional Las Vegas presence, increasing its Strip exposure to 32% of total EBITDA, vs. 20% currently."

Although Wall Street analysts are bullish on gaming fundamentals, some are expressing concern about valuations. Caution is implicit, for example, in the hold rating and $75 price target Citigroup Smith Barney analyst Michael Rietbrock has on MGM Mirage. (Citigroup Smith Barney does and seeks to do business with companies covered in its research reports.)

In a research note, Rietbrock commended MGM Mirage on a "strong" quarter, but posited that Las Vegas operating momentum may be "as good as it can get." He added that there may be growing investor anxiety surrounding Wynn Resorts' Las Vegas grand opening and the business it might pull away from MGM Mirage.

Analysts are also cautious about the valuation of Las Vegas Sands, whose shares are trading around $47 -- more than 60% above the $29 price of the company's December initial public offering.

Merrill Lynch's Anders initiated coverage on the stock with a neutral rating late last month, saying he saw limited upside to the stock's fair value, which he posits at $47.

That said, Anders believes that Las Vegas Sands will be one of the "most exciting growth stories in the gaming industry" in the next few years. "Under the astute business mind of Sheldon Adelson, the company is increasing its presence in two key markets: Las Vegas and Macau," he wrote.

Still on tap are fourth-quarter earnings releases from Boyd Gaming ( BYD) and Caesars next Wednesday and Thursday, respectively.

Analysts estimate Boyd's fourth-quarter EPS at 37 cents on $523.7 million in revenue, according to Thomson First Call. Caesars is expected to report EPS of 8 cents and revenue of $1.03 billion.

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