Hands Off Boyd

Boyd Gaming (BYD) looked like it was set for a breakout a few months ago but now backing off from the triangle formation. Upward trend is waning though the selling pressure is not rising at the moment – consolidation seems to be the theme. BYD is part of the MIR 2 universe of stocks.

The current picture is of slowing earnings growth and a rising PE (even with a falling stock price). Also the stock does not trend well with the five year note which has helped in determining market direction with the gaming stocks (i.e. play on economic growth).

I would not be a buyer or seller of BYD at this point. The gaming sector is slowing down earnings wise from its rapid clip of the past year so that could set up some of the names for the downside (though in some cases it already has begun). At the same time, BYD is not exactly setting up for a good short position so I will wait for the opportunities as they come in this sector. I continue to hold MGM Mirage (MGM) long, though the stock is closing in on my stop at 65.

BYD is expected to report 2.08/share on the Feb 20. The market is looking for earnings growth to shrink for 2007 to $2.05/share.

BYD 4-yr chart: