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inthemoneystock (< 20)

Casino Stocks Are Still Trading Like Chinese ADR's



April 04, 2012 – Comments (2) | RELATED TICKERS: WYNN , MCRI , LVS

This afternoon, all of the leading casino stocks are trading lower with the major stock market indexes. The leading casino stocks are still generating good revenue from the Macao market. Many traders are waiting to see if the casino stocks will start trading like a U.S. stock instead of trading like a Chinese ADR. A fair case can be made that the daily chart of Wynn Resorts Ltd (NASDAQ:WYNN) looks very similar to the chart of Baidu Inc (NASDAQ:BIDU). Both stock made a short term high around late March 2012 and have been pulling back since that time. Recently, Chinese economic data has pointed to a modest slowdown. Obviously, at some point in the future the Chinese central bank (People's Bank of China) will try and stimulate the economy again. Until that time, traders should trade the casino stocks just the same way you would trade the Chinese ADR's.

Some leading casino stocks that are pulling back today include Las Vegas Sands Corp (NYSE:LVS), MGM Resorts International (NYSE:MGM), and Monarch Casino & Resort Inc (NASDAQ:MCRI). All of these stocks will generally follow WYNN stock which still remains the leading stock in the casino sector.

Nicholas Santiago

2 Comments – Post Your Own

#1) On April 05, 2012 at 10:22 AM, ETFsRule (< 20) wrote:

If you want to have twice as much fun, buy the casino stock that is also a Chinese ADR! Galaxy Entertainment (GXYEF.PK or GXYEY.PK) is a pure play on Macau gaming.

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#2) On April 05, 2012 at 9:08 PM, cp757 (< 20) wrote:

Of the more than 12,000 public companies traded in the US, there are only six with the combination of a market cap over $10 billion, a 2011-2013 revenue compound annual growth rate of more than 20 percent, and a 2013 estimated free cash flow yield of more than 8 percent. Those companies are Apple, Las Vegas Sands, NetApp, Baidu, Ensco and Vertex.’

AAPL Revenue is 127.84B and comes from marketing mobile communication and media devices but how long to get to 639.2 billion? Over the last three years the stock is up 625%

 LVS Revenue is 9.41B and comes from operating various integrated resort properties but how long to get to 47.05 billion? Over the last three years the stock is up 3,600%

NTAP Revenue is 5.96B and comes from networked storage solutions but how long to get to 29.8 billion? Over the last three years the stock is up 250%

BIDU Revenue is 2.30B and comes from Internet search services for China but how long to get to 11.5 billion? Over the last three years the stock is up 800%

ESV Revenue is 2.84B and comes from offshore contract drilling but how long to get to 14.2 billion? Over the last three years the stock is up 100%

VRTX Revenue is 1.41B and comes from commercializing small molecule drugs but how long to get to 7.05 billion? Over the last three years the stock is up 50%

Each of those stocks are great stocks and the arbitrary numbers on future revenue was set at 5 times current revenue. That to me is the question you need to ask. How reasonable is it that the stock's you pick will grow revenues. When you narrow the list from over 12,000 stocks and have an understanding of the 6 stocks left, you can decide which ones to buy. Apple is estimated to be at over 600 billion by 2015 and due diligence would give you an answer as to what you think that stock can get to. Each of those stocks has a high cost to entry which makes it harder for the competition to catch up to the market share they earn and keeps profit margins high.

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