The Cheapest Stock in Gaming Today

Today Fool.com contributor and gaming expert Travis Hoium looks at the cheapest stock in gaming today: Melco Crown (Nasdaq: MPEL  ) .

As Travis explains, Melco has far more upside than competing gaming stocks because it's building off a smaller base of casinos. Plans to roll out additional locations will have a far more dramatic impact on the company's bottom line than more established operators like Las Vegas Sands (NYSE: LVS  ) . Not only that, but Melco Crown is cheaper on an EV/EBITDA multiple as well.

That doesn't mean Melco is the only promising stock out there today. There is something to be said for mega-operator Las Vegas Sands as well. The company sports a dividend and some of the best properties in the world.

Las Vegas Sands is now looking to spread it's empire further, but will it be able to replicate its prior successes? Learn about all these opportunities, and the risks they pose, in our brand-new premium report on Las Vegas Sands. We're providing a full year of analyst updates to go with it, so make sure to claim your copy today by clicking here.

Travis Hoium owns shares of Melco Crown and Wynn Resorts. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 05, 2012, at 12:43 PM, cp757 wrote:

    I feel bad you don't get that many people commenting on these stories anymore. I can't imagine why.

    Travis your perception is unique. MPEL had a market share drop from 17.4% in September of 2011 to 14% in September of 2012. Do you think this is a trend that will effect your thesis? Las Vegas Sands had an increase year over year from 13.1% to 18.0%, a rise of almost 5%.

    In the first nine months of the year, revenue rose 15% from the same period in 2011 to 27.96 billion dollars. With 9 billion in the last three month's you get 36.96 billion dollars. I have said this figure could be closer to 40 billion but I am sure it will be over 37 billion.

    With the addition of 3863 air-conditioned rooms at the Sheraton Macao Hotel on the Cotai Central strip, Las Vegas Sands number's will continue to go up. The Cotai Central Strip (owned and developed by Las Vegas Sands) had an increase of 24% and the peninsula had a decrease of 2% so the migration of dollars to Las Vegas Sands properties is still working.

    In the 1Q Las Vegas Sands had EBITDA of over 1 billion dollars. Las Vegas Sands had non recurring adjustments to 2Q results of a $100 Million dollar write down in Macau for infrastructure and another $100-150 Million unidentified write down at the Marina Bay Sands. These took down 2Q results from 16-22 cents. The stock took a beating and now is undervalued. 3Q results will move the stock as well as increase dividends.

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