Its tough to imagine casino companies doing well in this economy. However, they are doing just that. The reason is not because of Las Vegas, but due to Macau. Macau has actually surpassed Vegas in gambling revenue and growth continues to accelerate. The following four companies are in a prime position to profit from this boom.
Las Vegas Sands Corp. (LVS), together with its subsidiaries, owns, develops, and operates various integrated resort properties primarily in the United States, Macau, and Singapore.
CEO Sheldon Adelson has done a great job of turning around the company from the brink of bankruptcy. The Venetian Macau is doing very well. The company has generated plenty of free cash flow and has even instituted a dividend. This year the company will pay about $800 million in dividends to shareholders. The stock has a forward P/E of 17.
MGM Resorts International (MGM), through its subsidiaries, primarily owns and operates casino resorts in the United States. The company's resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club.
While MGM's Vegas casinos have not been doing well, they are improving nicely. The company's MGM Macau has been helping the company generate cash flow. However, with the Las Vegas market finally recovering, this will be a good play on the U.S. economy. MGM will do fine long term as both markets recover. The company also trades very close to book value, which makes it a good value play.
Melco Crown Entertainment Limited (MPEL), through its subsidiaries, engages in the development, ownership, and operation of casino gaming and entertainment resort facilities primarily in Macau.
Melco is entirely a Chinese company. They do not have any operations in Vegas or other areas outside of Macau. Melco is a great play on the Chinese economy. J.P. Morgan sees the company generating $762 million in EBITDA, which is fairly impressive for a company of that size. The stock trades at a forward P/E of 15.58 and should do well as long as the Chinese economy continues to grow.
Wynn Resorts, Limited (WYNN), together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts.
While Wynn is profiting nicely from its casinos in Macau, it still continues to revamp its operations in Vegas. CEO Steve Wynn has said that Las Vegas is re-emerging again. The company is investing $99 million to upgrade its Vegas casino. Management continues to make sure that company stays on top by providing top notch amenities. The stock trades at a forward P/E of 17.6.