The month of March smiled upon casino companies with Macau stakes, setting up what could be another fantastic run. The month saw Macau casinos garner $2.5 billion from gamblers. That is a bullish 48% growth from 2010's March.
Many investors have hit the jackpot already in gaming stocks Wynn Resorts (Nasdaq: WYNN ) , Las Vegas Sands (NYSE: LVS ) , and the pure Macau play Melco Crown (Nasdaq: MPEL ) . But Friday's news sets up another episode of growth and momentum going forward.
The region's population gambles more than Americans do, and they are getting richer as Asian economies grow quickly. Gambling is a big part of the culture. Why settle for mahjong in the park when you can afford to gamble at a Macau resort? And it isn't just about China. Macau's proximity to both emerging and developed economies in Asia makes it a very attractive growth story long term.
Revenue growth in the latest quarter on a year-over-year basis for Wynn Resorts (52.9%), Las Vegas Sands (56.9%), and Melco Crown Entertainment (93.3%) has been robust. The latest figures out of Macau might just move analysts to raise estimates in the near future. Then it is off to the races.
Another angle to play is the suppliers to the casinos. International Game Technology (NYSE: IGT ) is the leader in this industry with annual sales of $1.9 billion. The company's international segment contributes 28% of total revenues, after jumping 21% in fiscal 2010. Shuffle Master (Nasdaq: SHFL ) had 50.9% of its $201 million in sales outside the U.S. in fiscal 2010.
As the Macau build-out continues, new casinos need electronic gaming, card shufflers, slot machines, sorters, gaming tables, and all the bells and whistles to keep customers happy. And somebody has to maintain the equipment. There is a lot of room for these suppliers to run. They are still under the radar while the casino operators get all the attention.
Which horse do you ride here? Right now, I'm bullish on this whole race.