Ticker Shock: Four Reasons MGM Is No Mirage

Proud dad here, and since this is my venue to brag, here it goes.

Last night was my daughter’s first T-ball game. She landed 3 sweet hits (they almost made it to the outfield), and she caught a grounder and forced a kid out at second base. I’m sensing scholarship here. Maybe one day she can support good old dad.

Asian stocks were a bit of a mixed bag. The Hang Seng was down 0.45% and the Nikkei ended up 0.9%. Meanwhile, European stocks were in the red earlier this morning. And here in the US, we're currently trading lower.

Here's what I’m focused on this morning:

MGM Mirage (MGM):
 I’ve opined many times in the past about casino stocks, and I’ve mentioned how the near-term isn’t likely to be overly kind to these types of companies for obvious reasons.

However, I do want to go back and touch on MGM Mirage because there are a few things drawing my interest a bit:

1. It's trading north of $5. That’s important to note as it’s a nice bump up from early April when it was trading under $3. At the very least, it could make it more attractive to some institutions.

2. Tracinda is involved, as I pointed out in this column on May 18. Having these smart money guys in the game is a good sign.

3. It looks like a director dropped some coin on the stock in May. That’s not as much insider-buying as I’d like to see (or what I imagined we'd see).

4. The red ink it’s expected to kick out in 2009 and 2010 remains a concern, which is why I wouldn’t push all my chips into the pot just yet.

Adobe (ADBE):
 No, not those southwestern homes made of mud and straw. I’m talking, of course, about the California-based company whose name goes part and parcel with all those PDF documents we open.

The company came out with its second-quarter numbers after the close last night.

Excluding items, it put up $0.35, which seemed to be in line with what analysts had been figuring on. Meanwhile, its revenue line came in at about $704.7 million, which was north of expectations.

Topping things off in the release, it said it’s “targeting third-quarter revenue of $665 million to $715 million.” It also indicated its looking for $0.30 to $0.37 excluding items on the bottom line.

My take:

1. I’m lukewarm on these guys. I realize the shares have had a decent little run since March. And its third-quarter expectations sound pretty decent, considering the Street is looking for $0.33 in EPS and roughly $676.1 million in sales in the period. However, in its second quarter, revenues were down from the same period the year before, which doesn’t make me jump for joy. I want lots of excitement and a reason to buy the stock, and I have neither.

2. It's trading at about 18.9 times this year’s estimate. Nothing to write home about. 

3. Insiders -- any interest? If you aren’t ponying up (lately) in the open market, why should I?