Don't Overlook Smaller Casino Stocks

We don't want to let the stocks of smaller gaming companies get lost in the shuffle of a year that has been one for the ages in the casino business. On the one hand, Las Vegas Sands (NYSE: LVS  ) has seen its stock rise through the stratosphere as Macau and Singapore draw gamblers by the boatload (literally). But if you don't want to pay high multiples for Las Vegas Sands or Wynn Resorts (Nasdaq: WYNN  ) , you can still find gambling stocks that have performed just as well.

Since Sept. 22, when I wrote about the best casino company in town, Boyd Gaming (NYSE: BYD  ) , Penn National (Nasdaq: PENN  ) , and my pick at the time, Monarch Casino & Resort (Nasdaq: MCRI  ) , have all beaten the market. That's pretty good stock performance for companies relying on a dragging U.S. economy. Take a look.

Company

Price 9/22

Price 12/30

Change

Monarch 10.67 13.03 22.1%
Boyd Gaming 6.80 10.67 56.9%
Penn National 28.34 35.23 24.3%
Las Vegas Sands 33.05 44.44 34.5%
Wynn Resorts 91.18 101.66 11.5%

Those who don't follow Monarch may be surprised by the tiny casino company's performance over that time. With just one casino, Monarch will never see the growth of Las Vegas Sands or Wynn Resorts, but with just $32 million in debt, there isn't a safer way to invest in gambling stocks.

Another favorite of mine, Penn National, has been making all the right moves in 2010, and in 2011 we could see its M Resort turn into an equity contributor.

Foolish bottom line
Not every investor can withstand the volatility of traditional casino favorites; for those looking for a less risky way to invest in gambling take a look at these forgotten casino stocks. You might just like what you see.

Interested in reading more about gambling stocks? Add one of these companies to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

I'm all-in:

Fool contributor Travis Hoium loves hitting an inside straight draw and does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Read/Post Comments (3) | Recommend This Article (4)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 30, 2010, at 8:48 PM, pogicraft wrote:

    O.o!!! Wynn resorts has a ttm P/E of 308!!!

  • Report this Comment On December 30, 2010, at 9:25 PM, Chartel wrote:

    Just a note to say that I still have nine fingers left for counting -- I previously said I could count on one finger the number of times I bet a nickel on something and lost.

    Well, I predicted LVS would not close above $48. for the rest of the year.

    Now, I won't say this with as much certainty and it hardly matters to me, personally, as I just get in and out of stocks quickly, but I strongly sense a calm before the storm in all stocks, just now and especially LVS.

    The coming market blackest whatever day cannot be far off. Just when? Don't know, but short will be beautiful -- that's quite for certain.

  • Report this Comment On January 06, 2011, at 11:21 PM, MegaEurope wrote:

    "With just one casino, Monarch will never see the growth of Las Vegas Sands or Wynn Resorts, but with just $32 million in debt, there isn't a safer way to invest in gambling stocks."

    Actually I'm pretty sure there is. LACO has $46M in cash and only $6M in debt.

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