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May 17, 2008 – Comments (4) | RELATED TICKERS: MGM , IGT , WYNN

Dear Smith;

I read an article on-line yesterday, a link from my old friend Merrill leading me to the site. The article was basically a discussion about how analysts from somewhere had re-rated a bunch of stocks. I think the name of the place was Starter Mind, or something like that.

So my friend Merrill asked me if I still wrote the Raw Value Report, the newsletter I used to put out 5 years ago, or maybe it was 6 years?

At any rate I told him no and asked what he wanted, and he told me he was curious about the gaming industry stocks that were in the article he sent me.

Merrill is good guy and because he spits a lot when he talks and limps when he walks I try to help him when I can.

Why he spits pretty good when he talks I’m not sure, but he limps when he walks because he has blisters on his toes, blisters he showed me once as we had coffee at Pearl’s Penniless Diner.

Arlene Commington and Covetta Klupsworthy were sitting at the table next to us when Merrill pulled off his boot, jerked down his sock and showed me his blisters. Thought them two ladies was gonna pass out there for a second, till I seen Arlene sort of licking her lips.

At any rate, this is what I told Merrill, and I thought I might share it with you as well. Use it wisely.

Wax

 

WMS Industries, Inc. (NYSE: WMS) Financial statement data is based on the company’s latest 10-K filing dated June 2007.

Short-Term Investor (Hold of one year or less) 

Based on a recent close of $37.08, the stock has First Resistance at $37.15, a 0% increase from recent levels, and First Support at $34.21, an 8% decline from recent levels.

Long-Term Investor (Hold of 3-5 years)

The stock is on my watch list with Reasonable Value Estimate of $30.59, a Buy Target of $15.29, a First Sell Target of $29.82, and a Close Target of $32.28. The stock currently has a Risk Reward Ratio of (1.6).

Investment Fundamentals (Based on annual financial data)

For fiscal 2007, the company had Earnings of $0.70 per share, and based on a recent price has a PE ratio of 52.6. Also for fiscal 2007, the company had a Return on Invested Capital of 30%, Average Free Cash Flow of ($0.03) per share, a Tangible Book Value of $5.65, and paid a dividend of $0.00.

Additionally, the company had a Cash Conversion Cycle of 181 days, an Enterprise Value of $38.39 per share, an Equity Value of $35.77 per share, a Current Ratio of 3.95, a Quick Ratio of 3.03, a Cash Ratio of 0.43, and a Flow Ratio of 3.52.

Investment Opinion (One investor’s conclusion)

I have no investment interest in this stock at the present time either as a short-term trader or a long-term investor, as the stock appears to be fairly valued.

 

Las Vegas Sands Corporation (NYSE: LVS) Financial statement data is based on the company’s latest 10-K filing dated December 2007.

Short-Term Investor (Hold of one year or less)

Based on a recent close of $76.09, the stock has First Resistance at $98.88, a 30% increase from recent levels, and First Support at $74.72, a 2% decline from recent levels.

Long-Term Investor (Hold of 3-5 years)

The stock is on my watch list with Reasonable Value Estimate of $0.00, a Buy Target of $0.00, a First Sell Target of $0.00, and a Close Target of $0.00. The stock currently has a Risk Reward Ratio of 0.

Investment Fundamentals (Based on annual financial data)

For fiscal 2007, the company had Earnings of $0.15 per share, and based on a recent price has a PE ratio of 518.4. Also for fiscal 2007, the company had a Return on Invested Capital of 3%, Average Free Cash Flow of ($10.80) per share, a Tangible Book Value of $6.35, and paid a dividend of $0.00.

Additionally, the company had a Cash Conversion Cycle of 6 days, an Enterprise Value of $94.96 per share, an Equity Value of $57.22 per share, a Current Ratio of 0.92, a Quick Ratio of 0.91, a Cash Ratio of 0.57, and a Flow Ratio of 0.36

Investment Opinion (One investor’s conclusion)

At present the stock holds no longer-term interest for me. However, the stock does hold some potential short-term interest.

I would be a buyer of the stock at recent levels, placing a Stop under my trade at $72.25. I would not add to my position on price pullbacks, and would sell half my short-term position at or near $87.50, and close my short-term position at or near $99.

 

MGM Mirage, Inc. (NYSE: MGM) Financial statement data is based on the company’s latest 10-K filing dated December 2007.

Short-Term Investor (Hold of one year or less)

Based on a recent close of $52.03, the stock has First Resistance at $55.44, a 7% increase from recent levels, Second Resistance at $74.74, a 44% increase from recent levels, and First Support at $47.60, a 9% decline from recent levels.

Long-Term Investor (Hold of 3-5 years)

The stock is on my watch list with Reasonable Value Estimate of $0.90, a Buy Target of $0.45, a First Sell Target of $0.88, and a Close Target of $0.95. The stock currently has a Risk Reward Ratio of (565.3).

Investment Fundamentals (Based on annual financial data)

For fiscal 2007, the company had Earnings of $1.67 per share, and based on a recent price has a PE ratio of 31.1. Also for fiscal 2007, the company had a Return on Invested Capital of 7%, Average Free Cash Flow of ($17.56) per share, a Tangible Book Value of $14.88, and paid a dividend of $0.00.

Additionally, the company had a Cash Conversion Cycle of 11 days, an Enterprise Value of $88.11 per share, an Equity Value of $15.95 per share, a Current Ratio of 0.68, a Quick Ratio of 0.61, a Cash Ratio of 0.24, and a Flow Ratio of 0.44

Investment Opinion (One investor’s conclusion)

At present the stock holds no short-term or long-term interest for me.

Given the current uncertainty of the markets and the economy, I don’t believe the stock will be able to break out above first resistance, but if it should, I don’t believe such a breakout is sustainable. Since the short-term reward potential is at levels approaching second resistance, price levels that I don’t believe the stock can achieve, there is no short-term interest.

As a long-term investment, the company has too much debt at $37.46 per share. Already the company has negative cash flow, and interest expenses at 9.21% of Sales. As interest rates increase, the debt service will also increase, which will further erode cash flows and earnings.

 

Boyd Gaming Corporation (NYSE: BYD) Financial statement data is based on the company’s latest 10-K filing dated December 2007.

Short-Term Investor (Hold of one year or less)

Based on a recent close of $18.17, the stock has First Resistance at $19.09, a 5% increase from recent levels, Second Resistance at $31.49, a 73% increase from recent levels, and First Support at $17.10, a 6% decline from recent levels.

Long-Term Investor (Hold of 3-5 years)

The stock is on my watch list with Reasonable Value Estimate of $14.72, a Buy Target of $7.36, a First Sell Target of $14.35, and a Close Target of $15.54. The stock currently has a Risk Reward Ratio of (1.8).

Investment Fundamentals (Based on annual financial data)

For fiscal 2007, the company had Earnings of $1.24 per share, and based on a recent price has a PE ratio of 14.7. Also for fiscal 2007, the company had a Return on Invested Capital of 10%, Average Free Cash Flow of ($2.75) per share, a Tangible Book Value of $5.00, and paid a dividend of $0.58.

Additionally, the company had a Cash Conversion Cycle of (14) days, an Enterprise Value of $41.88 per share, an Equity Value of ($5.54) per share, a Current Ratio of 0.89, a Quick Ratio of 0.86, a Cash Ratio of 0.44, and a Flow Ratio of 0.46

Investment Opinion (One investor’s conclusion)

At present the stock holds no longer-term interest for me. However, the stock does hold some potential short-term interest.

I would be a buyer of the stock at recent levels, placing a Stop under my trade at $16.75. I would not add to my position on price pullbacks, and would sell half my short-term position at or near $25.00, and close my short-term position at or near $31.50.

 

International Game Technology, Inc. (NYSE: IGT) Financial statement data is based on the company’s latest 10-K filing dated September 2007.

Short-Term Investor (Hold of one year or less)

Based on a recent close of $36.19, the stock has First Resistance at $38.99, an 8% increase from recent levels, Second Resistance at $41.21, a 14% increase from recent levels, and First Support at $33.27, an 8% decline from recent levels.

Long-Term Investor (Hold of 3-5 years)

The stock is on my watch list with Reasonable Value Estimate of $39.38, a Buy Target of $19.69, a First Sell Target of $38.39, and a Close Target of $41.56. The stock currently has a Risk Reward Ratio of 1.4.

Investment Fundamentals (Based on annual financial data)

For fiscal 2007, the company had Earnings of $1.08 per share, and based on a recent price has a PE ratio of 33.4. Also for fiscal 2007, the company had a Return on Invested Capital of 48%, Average Free Cash Flow of ($1.23) per share, a Tangible Book Value of $0.27, and paid a dividend of $0.52.

Additionally, the company had a Cash Conversion Cycle of 79 days, an Enterprise Value of $39.90 per share, an Equity Value of $32.48 per share, a Current Ratio of 1.86, a Quick Ratio of 1.65, a Cash Ratio of 0.38, and a Flow Ratio of 1.46

Investment Opinion (One investor’s conclusion)

I have no investment interest in this stock at the present time either as a short-term trader or a long-term investor, as the stock appears to be fairly valued.

 

Wynn Resorts, Ltd. (Nasdaq: WYNN) Financial statement data is based on the company’s latest 10-K filing dated December 2007.

Short-Term Investor (Hold of one year or less)

Based on a recent close of $109.52, the stock has First Resistance at $120.32, a 10% increase from recent levels, and First Support at $103.93, a 5% decline from recent levels.

Long-Term Investor (Hold of 3-5 years)

The stock is on my watch list with Reasonable Value Estimate of $18.77, a Buy Target of $9.39, a First Sell Target of $18.30, and a Close Target of $19.81. The stock currently has a Risk Reward Ratio of (47.8).

Investment Fundamentals (Based on annual financial data)

For fiscal 2007, the company had Earnings of $1.08 per share, and based on a recent price has a PE ratio of 101.6. Also for fiscal 2007, the company had a Return on Invested Capital of 12%, Average Free Cash Flow of ($8.89) per share, a Tangible Book Value of $16.50, and paid a dividend of $0.

Additionally, the company had a Cash Conversion Cycle of (1) days, an Enterprise Value of $129.34 per share, an Equity Value of $89.70 per share, a Current Ratio of 2.70, a Quick Ratio of 2.58, a Cash Ratio of 2.18, and a Flow Ratio of 0.53

Investment Opinion (One investor’s conclusion)

I have no investment interest in this stock at the present time either as a short-term trader or a long-term investor, as the stock appears to be fairly valued.

4 Comments – Post Your Own

#1) On May 17, 2008 at 4:15 PM, EnigmaDude (93.19) wrote:

wax - i could not get past the vision of Arlene licking her lips!  Gross!

 Anyways - i live in La Vida Loca Las Vegas, and its a lot less crazy than it was a few years ago when I first arrived.  People are "gaming" less, housing is bottoming out (according to a Realtor who I spoke with last night), budgets are getting slashed left and right, and I'm outta here!  (Back to Denver and clean, cool mountain air).  If it were me, I would wait a while to get into (or take a long position) in any of these stocks.

The good news is that the City will re-emerge in another year or two stronger and carzier than ever.

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#2) On May 17, 2008 at 8:53 PM, Tastylunch (29.20) wrote:

You know what I like about you analyses Wax is that you include non-candidates as well as  buy candidates. All too often you'll only see write-ups on buy recommendations. Less often will you see negative reports suggesting no course course of action.Most people wouldn't bother to publish what they don't find, which in some ways makes the non findings more useful. :-)

 

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#3) On May 17, 2008 at 8:57 PM, wax (97.00) wrote:

ED...I hope not, but hey!, they got pills for that now. (grin it was a joke)

As to the vision of Arlene...I sorta like it when something sticks with you. Makes me feel like my story has some merit. 

At any rate, Las Vegas is an incredible town. Years ago several us maintained a suite at the Stardust. We would visit 6 or 7 times a year.

Then the kids got to an age where we wanted to be apart of their activities, and on and on. Finally in 1987 we took the kids to Vegas. We all had a ball. It was after that, we gave up the suite and said good-bye to Vegas. We haven't been back since.

During the years away the city has changed a great deal, not to mention had it's ups and downs. But in the end, it is the gaming capital of the world, and will probably outlast us all.

Enjoy your return to Denver. 

Wax 

 

 

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#4) On May 18, 2008 at 8:03 AM, wax (97.00) wrote:

Tasty...thanx for the comments.

I include the stuff I include becasue to me there are two basic types of investors, short-term investors and long-term investors,  each using the markets in very distinct ways.

I also know that I am going to provide, for what it's worth, my own personal opinion of how I am most likely to use the stock under discussion, which is the reason for the fundamental data, it is intented to support my opinion of a stock.

I hope other investors find this information useful, and are able to apply some it to their stock considerations. If not, then I hope they find a little humor in the lead-ins.

Wax




 

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