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.

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