THE VEGAS AND CASINO STOCKS HAVE HELD UP WELL OVER THE PAST MONTH, AND SHOW
GOOD GAINS OVER THE PAST MONTH.
Update October 13, 2013 When Wall Street trading resumes in the morning the Dow Industrials will open above
15,000 again. And over the last several weeks, the Vegas and casino stocks did relatively well and are showing
for the most part, solid gains.
Please click here to read my weekly stock market report.
While the Vegas stocks have joined the bull
market, the bull market is now slowing down, and the Vegas stocks could also fall with the rest of Wall Street.
But over the last few weeks they did relatively well. It makes me wonder if the Vegas and Casino stocks might be
immune to a selloff on Wall Street now? There is talk about the Vegas gaming market getting stronger, but could the
growth continue if Wall Street suffers big losses?
As I've been telling you, it's
important that you don't get greedy. There could still be profit taking.
all of the stocks we follow now have at least double-digit percentage gains from a year earlier. Some have triple digit
percentage gains. However, this market went up too far and too fast and some selling and profit taking has to be
Here are the stocks we follow, their symbols, how they closed on Friday,
and the percentage change from a year earlier.
Las Vegas Sands LVS
$67.50 Up 58%
Wynn WYNN $166.80 Up 46%
Boyd BYD $14.01 Up 112%
International MGM $20.55 Up 99%
CZR $22.10 Up 259%
Melco Crown Entertainment MPEL
$33.94 Up 150%
Isle of Capri ISLE $7.38
Williams Gaming WMS $26.00
Las Vegas Railway Express XTRN
3-cents Down 78%
International Gaming Technology
IGT $18.55 Up 44%
SHFL entertainment SHFL
$23.17 Up 53% (Buy out target of Bally's Gaming)
SGMS (Is taking over WMS so it is added to our list of 11) $17.48 Up 124%
SHFL is now a takeover target of Bally's Gaming, and some shareholders of SHFL
are not happy with the price that SHFL management appears ready to accept. Expect litigation and shareholder
opposition to the takeover bid which might result in a higher buy out offer for SHFL or else it might kill
the deal. Shuffle Master which is now known as SHFL Entertainment and is trying
to expand into online gaming and it is expanding the marketing of its "Fire Bet" on craps and the Fire Bet just
started at Harrah's Rincon in San Diego, California, which is a Native American casino operated by Caesars. This shows
that the Fire Bet can even be used on card craps games and it opens a new market for the Fire Bet add-on. SHFL
entertainment is the company that makes automatic card shuffling devices for various casino games and poker
tables. We added SHFL to our list of stocks to watch a few months ago after it bought the company
that created and licensed the "Fire Bet" on craps tables. We think SHFL is a growth company
because of its ties to poker which is spreading and growing. It is also entering the online poker business and it wants
to offer other online gaming. It looks like Bally's Gaming shares my optimism about SHFL.
MGM Grand is again advertising after that tragic, fatal accident involving a performer at the Cirque
show KA. But there is no mention of the show. The company announced a cancellation of shows but it is not known
what impact it might have on visitation to the MGM Grand or what impact it might have on the MGM stock price.
What ignited Caesars eight months ago was
news that gaming action had increased in Las Vegas and Nevada, and more prospects that online gambling might be legalized
soon in New Jersey and other states. And now Nevada has online poker gaming and Caesars is
already well established as an online company in Europe. Company officials expect CZR will also benefit
from online gaming in the various states through Caesars and WSOP branded online poker and
online gaming sites and the company might be offering online players bonuses and incentives to get them to
visit its brick and mortar casinos. CZR also has casinos in Atlantic
City, New Jersey. But the company is still overloaded with debt and it will be issuing more debt (bonds) to lower interest
rates it pays, and it is selling some casinos around the country to raise capital and streamline operations. The company's
project at Center Strip in Vegas for commercial and non-gaming entertainment including a giant "wheel" is also getting
positive reaction in the media.
WMS will be taken over by Scientific
Games Corporation by the end of this year. Shareholders have approved the takeover.
Scientific Games makes instant-lottery games. When there are buyouts in a sector, it is not unusual
for speculators to start buying other stocks in the same sector expecting more buyouts to come.
As I mentioned on our "Stock Market Notes" page I expected that Dow 15,000 would trigger profit taking, and we certainly had it. A pause to refresh, or a slowdown in the rally is not necessarily a bad thing.
The gaming sector is now showing overall strength -- though it is modest strength.
XTRN which is the symbol for the Las Vegas Railway Express appears to be facing
another delay for the start of its railroad service between Las Vegas and Southern California. In a press release two
months ago, the company said that it will not renovate the old Amtrak train station in downtown Las Vegas
and now will build a new train station in North Las Vegas and the company claims this will allow it to handle as many
as 9 trains in the future. A new train station in North Las Vegas will probably not be ready till late Summer of
2014 and while company and city officials are talking about this there still is not a formal announcement. The company
has also announced that it will build and offer train cars with service similar to what is planned for its Vegas route to
other railroads around the country. However, there is still no date for the start of service between Southern California
and Las Vegas.
A start of August 2014 is still iffy and depends on when construction
of the train station in North Las Vegas can begin and when it can be completed. There is also no word yet about the
actual rail cars -- where they are, if they have been purchased, and when work will start to renovate them. Another
question is if the company will need additional funding for this ambitious project and what impact it might have on luring
passengers who might object to arriving in North Las Vegas instead of in downtown Vegas.
the positive side, the company has received a lot of positive media coverage following its big announcement that it has
a deal to use Union Pacific's tracks for part of its route between Vegas and Fullerton, California. But the stock is
under pressure. What surprised some was a news release that it needed to raise $100-million of which $56 million will
go for rail improvements and that money will be paid to Union Pacific. XTRN officials had hoped
to have test runs later this year, and it's too bad that it can't be fully up to speed
during the holiday period both for those travelling to Las Vegas and for Nevada residents travelling to Southern California.
The company still must hire and train employees and staffers and it still needs a contract to use rails from around Barstow,
California to Fullerton where the train will start its route. The train will not stop in downtown Los Angeles and that
might also put some doubt in the minds of investors. The stock in the last week traded at a new low price of 3-cents
a share which is well below its record highs in the range of 45-cents.
gaming and casino stocks still have some problems.
This past week, Caesars was
well above its IPO price of $9. There have been many warnings that CZR has too much debt, and too many
shares in insider hands waiting to be sold publicly. The latest news is that Caesars is losing money, and it is returning
to the debt market to raise money, that doesn't come as a surprise at all. Be careful,
more stock issues are coming which could hit this stock price hard. Is someone about to scream out "the Emperor
has no clothes!" But the company stands to excel if online gambling and online poker become legal in the United
LVS is primarily a stock that reflects overseas gaming
interests in Asia and quite possibly Spain in the next couple of years -- and that's what's been driving this stock.
But it appears that euphoria has worn off. And there are concerns about falling profits in Macau as the Chinese economy
cools. There have been reports about the economy in China slowing. Helping the company now are its plans
for gaming in Spain, and it has targeted Madrid.
Wynn remains the
highest price stock on our list. WYNN is moving into Macau but it is making its move late in the game.
And the latest reports are that the Chinese economy and the gaming market in Macau are both improving again.
Boyd Gaming is a true domestic company and it finally made a deal to sell off
its North Strip development which allows it to focus on its better ventures.
is the big player in Macau and it too has suffered along with the Chinese economy. Melco Crown Entertainment is
showing a price that has doubled over a year earlier but this stock used to be showing much bigger year over year percentage
The wild stock has been Las Vegas Railway Express
and XTRN is its symbol because it has had some wild swings. But penny stocks will have wild swings
and literally can turn on a dime... or a penny.
Of course people will get to Vegas when there is a big event such as a fight of a lifetime
or a big building implosion. So maybe leveling the Harmon in CityCenter will help boost traffic at least for a
weekend. And that big event appears to be getting closer.
The big question is if the world's banks and governments can
resolve the current financial worry and get the markets back to a firm footing, and if the unemployment rate can get cut quickly
with job creation.
Here are the percentage changes for 2012:
LVS up 8%, WYNN up 2%, BYD
down 11%, MGM up 12%, IGT down 18%, MPEL up 75%, ISLE
up 20%, WMS down 15%, XTRN up 25%, and the new additions to the list CZR
down 23%, SHFL up 24%.
Now compare that to how the stocks did for the year 2011:
4%, WYNN up 9%, BYD down 29%, MGM down 30%,IGT down 2%,
MPEL up 53%, ISLE down 55%, WMS down 54% and XTRN was
down 50% on the year.
Here is how our stocks did
for the year 2010:
up 208%, WYNN up 78%, BYD up 27%, MGM up 63%,IGT
down 6%, MPEL up 89%, ISLE up 37%, WMS up 13%, and XTRN
was up 67% on the year.
More About Las Vegas Railway Express
Las Vegas Railway Express is not going to start regular service
until probably August of 2014, or even later, according to my interpretation of a recent company statement. We
know that construction on the new train station in North Las Vegas can't start till later this year because
the permits won't be in place till then. And the company still hasn't bought all of the passenger cars it needs and
remodeling work on the used cars it is buying hasn't started yet. On the positive side it has one of two agreements
with freight railroads to use the rail lines between Vegas and Southern California. And the company announced that it
has plans to offer Vegas-style passenger cars on other train routes to other gambling destinations that would run in other
states. However, it seems that these would be independent cars and would not be other X Trains.
The company has also hired
a marketing firm so expect to see a lot of "PR" about the company being released especially online. Remember
that "marketing companies market" so we might be seeing a lot of repetitive realeases. You will have to carefully
monitor these to determine if the releases are rehashing old news or if there are truly new developments.
The newest report from the
company includes that it is starting up a travel service for booking hotel rooms and this service will also handle train reservations
and the company has indicated it will start hiring for this travel service. The company indicates that the $99
fare is an "introductory fare" and that opens the door to a fare hike later if there is strong demand or if the
company underestimated its start-up costs.
I suggested that the company try to sell the naming rights of its cars to the hotels and
casinos in Vegas. In fact, the company could also sell signage and decoration privileges to the casinos and hotels that
purchase the naming rights. For example, should Joe's Hotel buy the naming rights, Joe's Hotel could have posters, signs,
even brochures and gaming coupons on each seat in the passenger car. I have spotted some passenger trains
that are "wrapped" with advertisements much like cars and trucks are wrapped. I guess the X Train cars could
be wrapped as well with ads, though there won't be too many people seeing the train cars as it makes its way through the Mojave
About a year ago, the
chairman of the train company Michael Barron sent me a text message responding to a post on YouTube.com about gambling on
its trains. Barron in the text said the company had scrapped all plans to offer gaming on its trains. But recently
there was a news report that indicated there might be "practice games" or "play" tournaments with prizes
that didn't require cash buy-ins or entry fees. A few months ago it was announced that it hired a new Chairman of the
Board who has been in the railroad industry for decades.
Now that there is an operating agreement between the Las Vegas Railways Express
and Union Pacific for running the train between Vegas and Barstow, the next step is to get one with Burlington
Northern for using the freight rail lines between Barstow and Southern California. The company says it
has bought its first rail cars and they are supposed to be refurbished to fit the luxury style that is planned.
Las Vegas Railway
Express is but one of the companies that wants to offer passenger train service between Southern
California and Vegas. Other projects include a proposed high speed rail line that is multi-millions of dollars and several
years away, plus another line to operate on existing tracks known as the Z Train. A report on
the X Train and the Z Train is on our website on our "Travel / Vacation" page. However, at this time is appears that the high speed rail project will not receive federal funding.
There is not much public
information about the Z Train either, but we have learned that the Z Train project is now
being called the Pullman Company and see our report on the "Travel / Vacation" page.
course there is also a lot of discussion and speculation about a high speed rail line in California that will be partially
funded by State and Federal taxpayer money -- but it should be pointed out that the government's high speed rail
line is not planned to go to Vegas. There is another group with plans for a high speed rail line to Vegas which was
called DesertXpress and is now called XpressWest but that is not part of the high speed line project that has federal
funding. But XpressWest in July was told it will not get federal funding and that pretty much derails this
project. It still might try to get federal funding or come up with some private funding. It had been making
plans to coordinate with the Los Angeles Metro train system to link to passenger trains in northern Los Angeles County and
ultimately to Victorville where it expects to have its station for departures to Vegas. Meanwhile, we have to wonder
what a downgrade of U. S. debt and rising interest rates could do to any fund-raising and investment for projects such as
the Vegas Economy
One thing is certain: Las Vegas can't be healthy if the American economy isn't healthy. There
are doubts about the lingering sluggishness in the economy and that is not allowing Las Vegas and other gambling meccas to
recover. And there are more worries about a double dip recession despite the talk about a recovery. Vegas can't get more revenue
when the rest of the country is pinching pennies and worried about jobs.
A year ago I said it was possible that the "easy money"
to be made in the casino stocks might be behind us. Now, I'm sure of it. The easy money making time is over. In fact, with
many of the stocks now showing losses from a year ago, you might wonder if there is any upside potential left for these issues?
While a few of these stocks
are still showing modest gains from a year ago it will take a lot more to get these stocks back to their record highs that
were set before the recession. And with the selling of the past few weeks it might be hard to convince investors that
these stocks are good bets. Vegas and gaming have a long way to go before full recovery and it will depend on the overall
Best wishes, Alan Mendelson