No Luck With Gambling Stocks

Written by:
Jagajeet Chiba
Published on:

It's the Las Vegas gambling stocks that are the real losers these days, not the actual gamblers.

Tony Sagami of Money and Markets writes this week about how the grand Las Vegas casinos were built - on the losses of players monies.  And today, during these tough economic times, Las Vegas is hurting.

"Gaming stocks have gotten hammered," Sagami points out.

Many are down more than 50 percent in fact.

These are among your biggest losers:  The Las Vegas Sands shares are down from a high of $144.56 to a low of $6.14 this month.  Boyd Gaming has dropped from a peak of $48.52 to $4.43.  Wynn Resorts has gone from a peak of $164.96 to today's $36.13.  Ouch!  MGM Mirage is down from a high of $99.75 to $9.90 and Melco Crown Entertainment is down from $22.20 to $3.20.

Las Vegas Sands (NYSE: LVS), operator of the luxurious Venetian casinos in Las Vegas and Macau, has gotten bloodied the worst - plunging from $144 to only $6.

Talk about a brutal beating!

The reason LVS has gotten clobbered so badly: its aggressive Asian expansion plans. It spent $2.3 billion on the Macau Venetian and will spend another $4.5 billion on its new Singapore casino.Since casinos have been so profitable in the past and with stock prices so low, I am now starting to hear a lot of bottom-fishing talk about this being the time to jump back in.And it gets worse for casino stocks as Macau is slumping even more than Vegas.

Although there could be some reason to buy shares now.

Sagami gives an example of this:

Wynn Resorts, for example, is currently trading in the mid-$30's. So if you bought 100 shares, you'd have to shell out about $3,500. You could, however, buy a January 2010 option with a strike price of $40 for less than $400.

If Wynn Resorts rallies between now and January of next year, these options could easily double, triple, or quadruple your money! You could turn a couple hundred dollars into several thousand in a few months.

Jagajeet Chiba, Gambling911.com


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