Do investment opportunities in gambling stock really exist?

 

Casinos have always been, and will always continue to be, big time money makers with fantastic profits to show for each and every year.

Casino entertainment centers in Asia have exploded over the years and large Vegas funded casino construction sites are mushrooming in big numbers!

Since 2003, Macau has witnessed an invasion of casino giants e.g. Wynn, MGM, Sands. All eager to invest heavily into Asia by constructing some of the largest casinos the world has ever seen. Despite its smaller gaming capacity, Macau's revenues are now outstripping those in Vegas, because its punters prefer the gaming tables to slot machines and play for higher stakes. Macau's gross gaming revenues in 2006 at 22 casinos was $7.2bn whereas Las Vegas's gross gaming revenues in 2006 at the strip's 40 something casinos was $6.6bn.

 

Casinos need to be in Macau and Asia if they want to be part of the ever expanding world of casino entertainment.

 

This leads us to a questions that begs answering, is casino stock worth investing in?

 

Lets look at Las Vegas Sands, which is currently building the impressive Las Vegas Sands Resort & Casino in Marina Bay, Singapore. A very high price to earning ratio has caused a fair bit of trouble for Las Vegas Sands, as its growth through expansion has led the stock to go up three times as much since mid 2005. The stock has since fallen from its high of $109 to a more reasonable $83/share. However, the stock seems expensive as earnings estimates for this year put its P/E at over 50.
 

MGM is also looking for future expansion to increase it's stable of 23 casinos and has more realistic ratios to show for.

 

As for Wynn, they are expanding rapidly in Macao and the good news is that Wynn's stocks have not fallen as hard as the other casinos from their year highs.

 

For the American heavyweights, the key to profitability remains their expansion into the rest of the world by operating more resorts in popular tourist destinations. And growth accelerating through these expansions can only be beneficial to the stock.

 

And now...  are you ready to invest in casino stock?