There are so many sectors of the market that are making 52-week lows and the casino stocks are no exception. We made a Watch List for the sector back in June and at the time they were cheap. Guess what? Cheap has become cheaper. But it was hard to go long because of rising oil and food prices.

Although oil has backed off to under $70/ barrel and consumers are adjusting, more and more people seem to be saving cash. This has not helped the gaming industry and these stocks continue to suffer. In fact, I was shocked at how much they have fallen in four months. Here is today’s action versus where these stock were in June.

Las Vegas Sands (LVS, $8.57, down $3.13), was $54

MGM Mirage (MGM, $10.22, down $2.22), was $42

Wynn Resorts (WYNN, $40.34, down $6.04), was $92

Boyd Gaming (BYD, $4.13, down $0.72), was at $16 (buyout candidate?)

Pinnacle Entertainment (PNK, $4.04, down $0.48) was at $12

Trump Entertainment (TRMP, $0.64, unchanged) was at $3

Most of these stocks are 50%-80% off their highs. Unbelievable. I haven’t checked the gaming revenues in a few months and I’ll try to get to it over the weekend. The market always overshoots to the high side when things are robust and tends to go to extremes when things are crappy.

The gambling/ casino business is still a growing industry and new legislation is allowing more and more states to participate. Plus the market abroad has even bigger potential. Given the reduced stock prices and lowered expectations, this is one sector that may be worth looking into buying some LEAP call options.

Rick Rouse
Rick@OptionsMentoring.com

Tags: Boyd Gaming, Las Vegas Sands, MGM Mirage, Pinnacle Entertainment, Trump Entertainment, Wynn Resorts

This entry was posted on Thursday, October 23rd, 2008 at 9:23 am and is filed under Company Commentary, Sectors. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.