Investors Bet on Vegas as Three Gaming Stocks Look Up
Investors are betting on upside. "All the metrics are improving. People are getting back into gaming stocks," says Grant Gorvertsen, a principal with the Las Vegas–based boutique investment bank Union Gaming Group. Gorvertsen, a former Deutsche Bank exec, says he'd like to see the lodging spend increase.
6,000 New Rooms to Fill
Upcoming room bookings are especially important for MGMMirage, scheduled to report earnings on Thursday. The recent opening of MGM's new CityCenter, which brings more than 6,000 new rooms and condos to the Strip, had sparked fears that the complex would take sizable chunks of business from the company's other properties, such as Bellagio, MGM Grand, and Mandalay Bay. "If MGM Mirage's booking levels are going up," says Gorvertsen, "it means that CityCenter is not cannibalizing as much as was feared."
Beyond CityCenter, and for Vegas properties in general, Gorvertsen sees clearing skies and fiscal sanity. "The [casinos'] expense structures are considerably tighter," he says. "Because a lot of the fat has been cut out, you don't need to recapture all of the lost revenue to get back to peak cash flow. That is helping to make these stocks more appealing to investors."