Macau gaming stocks still have room to grow
It looks like the Chinese middle class is flocking to Macau in a big way, even if speculators are fretting about a slowdown in the gambling haven's ability to entice ultra-rich visitors. Morgan Stanley just downgraded Galaxy Entertainment ( GXYEF , quote ) from outperform because at this point the opening of the Galaxy Macau -- and the accompanying market share gain -- is already priced into the stock. On the other hand, Melco Crown Entertainment ( MPEL , quote ) could run up to $9.50 in the analysts' eyes. Valuations remain compelling, they say. This is a reaction to the fact that Macau stocks have held up much better than many believed they would. The affluent are still spending 5% more in these casinos than they were a quarter ago, but the big story is that the mass market customer is also sticking around -- and spending 10% more on a quarter-to-quarter basis. In the long term, casinos that cater to the middle class may end up dominant. Starting around May, the elite names -- MPEL and Wynn Macau ( WYNMF , quote ) -- may start lagging or even decline.