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Can Casino Stocks Continue Winning Streak?


The space is way ahead of itself.

Usually I sleep five or six hours a night if I'm lucky. But last night, I nodded off at 8 p.m. and that was it until this morning. Getting out of holiday mode is tough.

Asian stocks rose overnight. The Hang Seng and the Nikkei were up 2.09% and 0.25%, respectively. However, European stocks were showing me a little bit of red early this morning. And here in the US, we're currently trading lower.

Here's what I'm seeing on this super cold Tuesday morning:

Wynn Resorts (WYNN)/Las Vegas Sands (LVS):
Both of these companies really cranked yesterday on some pretty heavy volume as the broader markets rose. But can the breakneck momentum that casino stocks have seen this past year be kept up in 2010?

Some thoughts:

1. This space is way ahead of itself and investors seem to be expecting a fast recovery and a return to normalcy. But I don't see it happening. I know of nobody that's excited about jetting to the desert so they can drop coin at the tables these days -- even with the incentive of free drinks.

2. While these companies do have plenty of big-name facilities and great reputations, let's not forget about the competition, both in terms of other casino companies and other gaming jurisdictions like Atlantic City, New Jersey, or Pennsylvania.

3. Maybe it's the stellar earnings they're expected to kick out? (Note sarcasm.)

Morgan Stanley
It had a terrific day yesterday, too, on good volume.

My take:

1. In September, I opined in an article that I thought the stock had come a little too far too fast. And although the share price is up a smidge since then, I still feel essentially the same way.

2. I do like this company, but would prefer to either see how the first couple of quarters of 2010 play out, or wait and see if it pulls back to the low to mid $20s before pulling the trigger.
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No positions in stocks mentioned.

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