Will Casino Stocks Crap Out in 2013?

NEW YORK ( TheStreet) -- I am a sucker for gaming stocks. I admit it; I simply like the idea of owning a piece of "the house."

It isn't the glamour and neon lights that I find very captivating (well maybe a little); it's the complete flexibility in customer service methods I find key. Each customer represents so much profit, casinos are able to go well beyond what almost every other business can spend.

The mountains of cash are entrancing for customers and shareholders. Between the choice of the customer or house, unequivocally I'll take the house every time.

Furthermore, casinos offer another advantage over many other industries; it's relatively easy to know how well a casino is performing. Due diligence is not a lot more difficult than slipping on tennis shoes and taking notes as you walk around.

Total due diligence is much more than walking around and observing the casino floor; however, if you walk the floors of enough casinos enough times, you have an opportunity to stay ahead of the curve.

For some companies though, including MGM Mirage ( MGM), Wynn Resorts ( WYNN) and Las Vegas Sands ( LVS), a simple walking tour may require a trip to Asia.

The Energy Wheel

It may at first glance appear unrelated, but natural gas will increasingly influence the gaming industry's earnings. Natural gas prices are so low that transportation is migrating from gasoline and diesel toward natural gas as a fuel source.

UNG Chart UNG data by YCharts

Natural gas is represented by United States Natural Gas ETF ( UNG); if your car was powered with natural gas instead of gasoline, the cost for fuel would feel like $2.25 a gallon.

A significant bonus with using natural gas is the production is domestic for the most part. The result is a significant reduction in imports and an improvement in our balance of trade.

Fuel prices drive the economy and the economy drives the profitability of U.S.-based casinos. Low natural gas prices equate to an increase in the total amount of disposable income. UNG currently trades near $21 and as long as it remains under $35, consider it bullish for the U.S. economy.

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