Need a gaming stock

[BradleyT]

Looking at extremely long term play here (30+ years).

Casinos or suppliers (IGT, WMS, etc..) or ones that dabble in both (AGI).

Thoughts?

[MaxPower]

Take a look at Shufflemaster (SHFL). Its an excellent company, which I still believe is under valued.

Full disclosure - I own stock in SHFL.

IGT is great company that pretty much dominates the slot industry, but perhaps a little overpriced.

You also might want to look at companies that are involved in the lottery industry or produce video lottery terminals.

[Ray Zee]

do you think gambling as we know it will be around in 30 years considering the internet and a cashhless society.

[Wildbill]

Why a 30 year stock? The sector is fully valued, if not overvalued right now. I read analyst stuff on everyone in the industry practically all day long and they are all in love and in bed with the industry right now. One of those too much good news is bad news scenario if you ask me. Usually gaming stocks cool off around April, that might be the usual pattern this year as well.

Over the long-term, and I never think more than a few years out when it comes to stocks, I would focus on some of the regional operators. I do like PENN. I think whenever it finally gets done, and I am pretty sure it will happen, Pennsylvania will be a can't miss market for slots. Beyond that they are nicely diversified with operations just about everywhere but Nevada. I don't think Nevada is really the place to be, you have to put way too much into properties and keep spending gobs of money just to keep up. Compare that to building a facility at a racetrack and only spending a few million here or there to upgrade the restaurants or slot product. Once in awhile you might add some rooms, but those almost pay for themselves and then you still make money on the extra business on the slots. No doubt about it, racinos are like a cash machine. Taxes are high, but margins are blockbusters and usually the states give you a fat no-compete zone to add a cherry on top. So maybe PENN or MNTG, but those Mountaineer guys seem too fixated on Nevada and spend way too much on investing on things that are far from sure things, especially that track in Ohio. I still can't figure out how you spend $60 million there.

Throw out some names of who you are thinking of and maybe I will be nice and give you some comments /images/graemlins/grin.gif

[DOTTT]

I agree that most of gaming stocks are overvalued right now, but there are some opportunities to be found. You mentioned MNTG in your post, it's very cheap on a relative basis, and it's growing at a much faster rate. I don't love their recent purchase from Harrah's but the agreement seems to be in their favor, and should increase earnings two years out from now.

I also like ISLE although I'll admit at current levels it would be better to wait for a pull back to the low 20's before making a purchase.

[Wildbill]

ISLE was in good shape, in my mind, until they got themselves involved in that Illinois hornets nest. I would advise everyone to stay out of there because who knows what comes of this supposedly last casino and what they choose to do next year, whether it be tax increases or supply increases. I have no faith that this will be the last of the supply, nor will the taxes ever be stable there.

MNTG is hard to back because of these inconsistent moves. I don't like it when management is trying too hard to do things that don't tie into a strategy. What do they want? I would love to hear how they see themselves in a few years and believe they mean it. PENN came out swinging when they bought into riverboats and they have stated clearly their goals. They stuck to their guns in Shreveport as well. Excellent job of executing a plan. If someone is looking longer term that has to be near the top of their priorities. I would rather overpay a bit now on a good management team than get a relative bargain for an uncertain team. In a few years the good team will likely be ahead in stock price and growth potential.