I recently played poker for the first time in a Texas Hold 'Em tournament. I had no idea what I was doing yet still managed to place fourth. Now, I'm hooked on Lakes Entertainment's
Investing can be like gambling in many ways. One difference is that investing has a positive expectation over the long term, while gambling does not. That's why I put Wynn Resorts
The stock trades at $53.29. The company's market cap is $4.75 billion. The company is building a luxury resort-casino in Las Vegas due to open in April 2005 and expects to carry about $1.8 billion in debt when the resort opens. But at this moment, there is no hotel or casino. It's all under construction.
So why is the stock trading at four times book value? Because investors are gambling on one thing: visionary hotelier Steve Wynn. The new resort will probably outstrip his previous successes. Probably. Possibly. Maybe. Investors are putting all their chips on double-zero and hoping the ball drops in for a big payoff.
But what if something goes wrong in the interim? What if something happens to Mr. Wynn? What if the competition, like recently mergedMandalay Resort Group
Any company has risks. Some of them even come to pass; look at Merck
But Wynn Resorts will only have big interest payments to make, and the name Trump Hotels
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Fool contributor Lawrence Meyers does not own shares in any of the companies mentioned but knows the difference between a pair and a full house.