Gaming stocks fizzle

Jun 9, 2008 8:23 PM

by Ray Poirier | Bottom fishers are being given plenty of opportunities to buy into gaming companies, with most companies seeing their shares trading at or below their 52-day moving averages. But only the stout-hearted are taking advantage of the low prices.

No wonder!

There just has not been any good news coming out of the industry. Just the opposite.

Each passing day has seen the price of oil reach a new high, supporting the naysayers who believe that fewer people will pay for the gasoline to drive to their favorite casino.

Then the unemployment numbers suggest that there are more people looking for work while failing to make their mortgage payments.

Even the hoteliers are discouraged. At a recent gathering, hotel executives warned that this would be a "tough year ahead."

And, one gaming analyst warned bond holders to keep their powder dry. When he looked at the two most recent leveraged buyouts – Harrah’s and Station Casinos – he said he feared there would be "an increase in defaults."

However, for contrarians who note that their most successful stock purchases came in the wake of 9/11, all these negatives are creating a buying opportunity. Provided, of course, that there is still some cash left in the kitty.