The economy seems to be getting stronger and stronger.
Unemployment is on its way down. The stock market (S&P 500) is
making all-time highs, so is it time to take a gamble?
I'm not talking about any gamble, I want a calculated gamble. One
that will pay off because times are getting better and that means
there is likely to be more disposable cash on hand. Where do people
go (and lose or) spend disposable cash? VEGAS!
Let's take a look at 3 stocks that have high Zacks Ranks and could
be worth a gamble.
) has been on a nice run over the last month or so. The stock has
jumped from about $12 and is now looking to test the $16 range and
that move may be the start of even better things to come.
A big reason for the move was the most recent earnings report. The
company reported its first profit in more than 7 quarters, and did
so with the Zacks Consensus Estimate calling for a loss of $0.10
per share in the quarter. By reporting $0.03 MGM delivered a 130%
positive earnings surprise.
This swing into the black has inspired analysts to move earnings
estimates for the casino operator significantly higher. Only six
months ago, analysts were calling for a loss of $0.50 for 2013.
Estimates have moved up since then, but really jolt higher from a
loss of $0.27 to a loss of $0.06 following the most recent
Similarly the Zacks Consensus Estimate for 2014 moved from a loss
of $0.024 in November 2012 to the current level of a gain of $0.10.
Just one month ago, the consensus was look for a loss of $0.09 in
2014, so the prospects look that much better.
MGM is a Zacks Rank #1 (Strong Buy).
Las Vegas Sands
sticking with the idea of top ranked casino and gambling stocks I
Las Vegas Sands
) up next. While MGM just kicked into profitability, LVS has been
there for some time.
The big idea is that LVS just reported its first positive earnings
surprise in a year. On May 1, the company reported $0.71 when the
Zacks Consensus was calling for $0.66. That five cent beat
translates into a 7.6% positive earnings surprise. Prior to that
report, the company had a string of three straight misses.
The better than expected sent analysts back to their models looking
increase revenue and earnings estimates. Positive earnings
estimates revisions really aren't that new to LVS, and since
November of 2012 the Zacks Consensus Estimate has been ticking
higher every other month. Starting at $2.61 in November, the
consensus edged higher to $2.70 at the end of April. With the
recent beat, the estimate now stands at $2.79.
The Zacks Consensus Estimate for 2014 also ticked higher over the
same time horizon. Starting at $3.03 in November 2012, the less
populated number has since ballooned to $3.20. The implied earnings
growth rate stands at 14.7%, and for a stocks the size of LVS ($48
billion) that is no small achievement.
LVS is a Zacks Rank #2 (Buy).
International Game Tech
The final gamble I am looking at is
International Game Tech
) this is more of a supply chain provider to the casino's but it
still fits in the overall scheme of a gambler's stock pick.
IGT has seen three straight positive earnings surprises, and has
beat the number in four of the last five quarters. That is a goof
think, but when we see the size of the last there beats in
percentage terms have been 18.8%, 16.7% and 20% respectively, we
have to get excited. Those are solid beats of size by a company
that is followed by 13-17 analysts depending on the quarter.
Those beats haven't turned into that much in the way of estimate
revisions. Starting in November 2012, the Zacks Consensus Estimate
called for $1.23 and since moved higher to $1.31. Nearly the same
move for 2014 estimates which moved from $1.28 to $1.33. Despite
the solid history of beating the number the analysts are not
letting 2014 estimates grow.
My limited experience with Casino's tells me that a big portion of
the money made comes from the slots, and as a maker of the slots,
IGT will always have a place in the gamblers stock picks. The thing
to look for is a consistent replacement rate on the slots, and that
will be an indication that the company could be set to see higher
Gamble? Not with the Zacks Rank
Just because this stocks are related to the gaming / gambling, one
should not think that they are a roll of the dice. These stocks all
have high Zacks Ranks, which looks for increasing earnings
The idea of a stronger economy, more disposable cash and well
performing casino stocks is good for the prospects of the overall
market. If casino's are doing well, then there is confirmation of a
number of other businesses doing well.
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Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor
in charge of the
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INTL GAME TECH (IGT): Free Stock Analysis
LAS VEGAS SANDS (LVS): Free Stock Analysis
MGM RESORTS INT (MGM): Free Stock Analysis
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