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Strategies & Market Trends : Value Investing

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To: Suma who wrote (30226)3/4/2008 1:10:51 PM
From: Paul Senior   of 70400
Gaming (gambling related) stocks:

Not sure which are "values". Sold a little IGT recently just to trim position, free up some cash. Stock at multiyear high. I believe I've read that slot machines are a cyclical business, and we are now in the beginning of a new buying cycle by casinos, as a newer generation of slots is being or has been developed. So maybe slot makers will show good sales and earnings gains over next few quarters. Who knows?

PENN confuses me. If the buyout offer goes through in the next few months, the stock will rise. If the offer collapses, in all other instances that I've seen where the deal gets canceled, the stock drops - usually back to where it was before the offer was made or where buyers suspected an offer was in the works. Sometimes the stock drops suddenly even below such a point, and then usually (it seems to me), the stock recovers to where it was before the offer. With PENN though, I believe the stock, near 12-mo. low, already is down to that level. So if the offer is indeed rescinded, I am hoping and expecting that the stock won't get killed. A retail investor coming in now is buying PENN for its business and prospects, and gets kind of a call option on the possibility of a fairly quick and good profit if the buyout comes to fruition.
I am considering adding to my position.

You could look at CNTY (Century Casinos). I like it because compared to others in the sector, it has a reasonable (lower) p/e and not as much d/e. One of its casinos is in Edmonton, which should do very well given the Alberta oil sands boom. I like that. But it may not be relevant since CNTY is diversified with several other casinos and casino operations.

OPMR is cash-in-search-of-a-business. They processed on-line gaming until that business was made illegal in the USA. I find the cash/sh number attractive given the stock price. And am hoping, of course, the management doesn't fritter away the monies, spend it egregiously on themselves, or make an unwise business investment with it.
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