As any gambler knows, the house always has the edge at the gaming tables. But knowing what the best and worst bets are can have a profound impact on your wins and losses. The same goes for investing in gaming companies.

The risk in gaming showed its ugly head in 2008, crushing gaming stocks and bankrupting others. The biggest casino stock (by market cap), Las Vegas Sands (NYSE: LVS), fell more than 98% before finally recovering, but is still saddled with nearly $10 billion in debt. Many big operators are facing the same problems of being overleveraged, but there's more upside to gaming than the headline-catching casinos in Macau.

Keeping it small
Somewhere in the metropolis of Council Bluffs, Iowa, you will find an Ameristar Casinos (Nasdaq: ASCA) hotel buzzing with locals. The location won't have the glitz and glamour of Las Vegas or the growing gaming revenue of Macau, but you will find a casino company that pays a dividend, a rare sight in gaming.

Ameristar isn't the only gaming company that doesn't get headlines but runs a successful gaming operation. Below are five under-loved gaming stocks and a few metrics to show how they stack up. A tough last few years renders P/E ratios nearly useless, so I've provided a few more relevant ratios.



Price/Free Cash Flow

LT Debt/Equity

Ameristar Casinos




Monarch Casino & Resort (Nasdaq: MCRI)




Isle of Capri Casinos (Nasdaq: ISLE)




Boyd Gaming (NYSE: BYD)




Penn National Gaming (Nasdaq: PENN)




Source: LT = long term.

For comparison's sake, both Las Vegas Sands and Wynn Resorts (Nasdaq: WYNN) trade at more than three times sales and have more than one times long-term debt/equity (albeit expected growth is a little higher). As you can see, debt issues aren't limited to big gaming companies with Ameristar, Isle of Capri, and Boyd Gaming all sporting lofty long-term debt/equity ratios.

Foolish picks
My favorite unloved casino stock is Monarch Casino & Resort, which operates a single casino in Reno, Nev., with just $38 million in debt and a very clean balance sheet. Its operations may not be overly exciting, but revenues have improved over the past five years on an annual basis, despite rough conditions in Nevada. Reno may be lost in the gaming shuffle in Nevada, but Monarch is performing very well.

Our Motley Fool Hidden Gems team likes Ameristar Casinos, which has great cash flow and a low price-to-sales ratio with operations all over the country. What is your favorite gaming company? Tell us in the comments box lower on this page.

Interested in reading more about Ameristar Casinos? Click here to add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

More on Gaming:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.