Betting On A Las Vegas Cinderella Story
The Dynamic Wealth Report
March 23, 2010
by Corey Williams, Editor
I took a few days off from analyzing the markets last week. Instead of
looking at economic data, corporate earnings, and stock charts, I
crunched a different set of numbers. I was looking at the betting lines
for the first two rounds of the NCAA college basketball tournament.
No, I’m not an odds maker. I don’t even gamble very often. I’m just a
sports fan who loves the constant excitement delivered by the first
weekend of March Madness.
I love the Cinderella stories. The upsets. And most of all, the last
minute buzzer beaters. The raw emotion of heartbreak and triumph is
shared by players and spectators alike.
And there’s no better place than a Las Vegas sports book to experience
it.
I met up with a few old college friends at the Orleans Hotel and Casino.
It’s located a short distance off of the Las Vegas Strip.
The Orleans isn’t the biggest, most glamorous, or most exclusive casino
in Las Vegas. It does, however, offer a clean environment, inexpensive
hotel rooms, cheap cocktails, and (most importantly for us) a good-sized
sports book. And they have a bunch of areas covered in flat screen TVs
to watch the games.
I’ve got to tell you, I was surprised by the number of people at the
Orleans.
-------------Sponsor-------------
Where Can You Turn $300 Into $1.3 Million Right Now?
Our own small-company specialist, Robert Morris, has found a
way to 'sniff out' tiny penny stocks on the verge of a major breakout. And
the timing for this has never been better.
You see, the system takes advantage of an obscure SEC regulation that
sends penny stock prices through the roof.
We've seen some stocks gain 852%... 5,450%... even 17,496% in no time
flat.
Click here
for the details...
-----------------------------------
According to cab drivers, blackjack dealers, and even the nice lady at
hotel registration, this wasn’t unusual.
In fact, they all said business is steadily improving. And it’s really
picked up over the last few months.
After taking in a few days in Las Vegas, I decided to give the casino and
gaming industry a closer look. I’m convinced casino profits will make a
big comeback this year. And the more affordable options like the Orleans
could lead the way.
The good news is the Orleans is owned by a publicly traded company,
Boyd
Gaming (BYD).
Boyd Gaming currently owns and operates 15 casinos throughout the US. It
also has a 50% ownership stake in the Borgata in Atlantic City.
The bad news is BYD faces an uphill battle. Their unique set of risks
crushed their stock price from almost $55 in July 2007 to under $3 in
March 2009. And right now their stock is trading for under $10.
However, the upside for BYD successfully managing through these problems
is phenomenal.
Here’s what you need to know.
BYD earnings have dropped steadily over the last few years. They’ve been
hurt by the drop in consumer spending caused by the recession. At the
end of 2009, casinos across the board started reporting gaming revenue
was stabilizing.
Now we’re seeing consumer spending rebound much faster than anticipated. This is a good sign gambling and hotel revenue will also begin to
rebound.
Right now, BYD’s stock price is being hurt by problems with three of its
properties.
As I mentioned earlier, BYD owns 50% of the Borgata in Atlantic City.
The MGM Mirage (MGM) owns the other half.
The New Jersey Division of Gaming Enforcement is investigating MGM’s
business partner in Macau. Apparently their business partner’s family
has ties to organized crime in China. (Organized crime and casinos? I’m
shocked.)
MGM decided the opportunities in Macau are better than Atlantic City. So
instead of fighting the investigation, they’ve decided to sell their
interests in gaming properties in New Jersey.
The uncertainty around who will end up owning the other 50% ownership
interest in the Borgata is hurting BYD.
The other problem involves bad timing on two acquisitions.
In 2006, BYD purchased the old Stardust Hotel on the Las Vegas Strip and
another gambling hall in Florida. That was at the peak of the real
estate boom.
The Stardust Hotel was torn down and construction on a new multi-billion
dollar Echelon Hotel and Casino was started. Then the credit
crunch hit…
Financing for multi-billion dollar projects disappeared. In August 2008,
BYD put their plans for Echelon on hold. The property is now sitting
idle. And plans to renovate the Florida property have also been put on
hold.
As you can see, BYD is working through some serious problems. But their
problems are also priced into the stock. If you can stomach riding a
risky stock for the long haul (at least five years), we could see the
stock return to its former glory. If you buy it today, you might grab a
gain of 400% to 500%. (And that’s worth the gamble!)
The biggest week so far this year for IPOs is underway. We’ll see six
IPOs priced at some point during the week. The company garnering the
most attention is semiconductor maker MaxLinear (MXL).
Print
Page
Bookmark Us
Home | Whitelist Us |
Terms of Use |
Privacy Policy |
Contact Us | Security |
Site Map