IGT picked as the ‘Best Stock’ for ’08

December 31, 2007 5:37 AM
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The recent buyout of Harrah’s and sale of MGM Mirage stock to Dubai World have placed a premium on those companies’ respective stock offerings.

But will they be the best stock investments in 2008?

Not according to Steve Halpern, editor of TheStockAdvisors.com. His pick is IGT, International Game Technology.

Halpern cited the results of numerous surveys from financial advisors, including Paul Tracy, of Street Authority Market Advisor.

"My top speculative idea for 2008 is International Game Technology," Tracy said.

The reasons for picking IGT are numerous. It is the world’s leading slot machine manufacturer. In addition to basic slot machine design and sales, the company generates more than half of its revenues by leasing machines to casinos in exchange for a percentage of the net win. The result provides the firm with a recurring stream of high-margin revenues.

Thanks to steady expansion in recent years, IGT now draws income from about 60,000 machines installed throughout casinos in key gaming markets across the globe.

That revenue stream has enabled the company to spend nearly twice as much on research and development activities as its closest competitors. In a recent poll conducted by Casino Player magazine, seven of the top ten most popular video slots were introduced by IGT.

Moreover, IGT is the mastermind behind what many predict to be the next great gaming industry product cycle, the introduction of server-based games. The idea is to have one giant computer control all the slot machines within the casino. This new technology allows the casino to cut down on labor, change games rapidly and monitor revenue in shorter time frames.

The bottom line, Halpern says, is "We believe the core North American market is poised to grow substantially over the next few years. Add to this the impact of strong international sales and growing gaming operations, and IGT’s overall earnings are expected to increase at a healthy +14% annual clip going forward.

"With a commanding lead, a well-respected reputation, and a knack for developing games that resonate with players, IGT should remain the clear leader in this high-growth industry for years to come."