Find the Perfect Gaming Stock for Your Portfolio
Dec 27th 2011 11:59AM
Updated Dec 27th 2011 12:46PM
Not all investors are created equal. Factors and metrics can matter differently for each of us, and as a beginner, it's important to decide which are essential to you before investing your hard-earned cash in a business.
Wynn Resorts' executives own 16.1% of the company. That means they have nearly $2.2 billion of their own money on the line. It isn't the highest ownership in the industry, but when you pair that with top-flight management, the company makes a great stable choice for a somewhat volatile sector. Wynn also pays a dividend, which indicates they have investors' best interests at heart.
Melco Crown Entertainment
Another set of important metrics (especially for gaming companies) is how much cash the casinos are generating (using property EBITDA) versus the value of the company (using enterprise value, or EV). Fellow Fool Travis Hoium recently took a look at these companies using this metric. Below are the results of what he found (you can click here to get more details):
|Melco Crown Entertainment||8.19|
|Las Vegas Sands||11.54|
Source: "The Best Stock in Gaming."
What that boils down to is that, of the companies above, Melco Crown is currently bringing in the most earnings for investors relative to how much the company is being valued by the market. This could mean big bucks for investors down the road if valuations relative to EBITDA rise to the levels of their competitors over time.
Las Vegas Sands
Las Vegas Sands owns casinos in multiple U.S. locations, Macau, and Singapore. That doesn't really sound exciting until you realize that LVS is the only company mentioned in this article with a presence in all three of the world's top gambling markets. While the domestic market hasn't been faring well the last few years, there is plenty of growth opportunity internationally. And with Las Vegas Sands enjoying dibs on one of the two only casinos allowed to operate in Singapore until 2017, investors should consider getting in while the company has a head start.
Perfection is subjective, Fool
Of the companies above, I like Wynn the best. But as we saw, Travis prefers Melco Crown. And to really get motley on you, Fool Austin Smith is loving Las Vegas Sands right now. Each company has something different to offer investors, but which one do you like for your own portfolio? Click below to add it to your Watchlist:
- Add Wynn Resorts to My Watchlist.
- Add Penn National Gaming to My Watchlist.
- Add Melco Crown Entertainment to My Watchlist.
- Add MGM Resorts International to My Watchlist.
- Add Las Vegas Sands to My Watchlist.
At the time this article was published Fool contributor Amanda Buchanan holds no position in any company mentioned. Click here to see her holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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