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No Summertime Blues Here: SGMS, LLEN, XTXI

|Includes: DVN, LLEN, Scientific Games Corp (SGMS)
Scientific Games Corporation (NASDAQ:SGMS) Gets Boost on Lottery Bid; L & L Energy (NASDAQ:LLEN) Opens Third Facility in China; Crosstex Energy (XTXI) to Report Q2 ’10 EPS on August 8.
By Dennis Askew

Three SmallCaps with no Summertime Blues in Sight

SGMS: Texas Lottery Deal Could be worth $100 Million

LLEN: New Operation Could Produce $78 Million in Annual Revenues

XTXI: $1.54 Billion in TTM Revenues for $6

First up this morning we have Scientific Games Corporation (SGMS) http://www.scientificgames.com/ currently trading in the $9.91 range. SGMS has a 52-week high of $19.29 set on 10-14-09 with current trailing twelve month revenues of $913+ million. That’s nearly a billion in revenues for $10. SGMS sells gaming machines, central monitoring systems, and game content to licensed bookmakers; video lottery terminals; gaming terminals and content; computerized systems for pari-mutuel wagering; and sports betting systems and services, as well as engages in venue management gaming operations. SGMS also has strategic agreement with Playtech Ltd., to develop and market Internet and land-based gaming products and services to regulated gaming operators. Can a put/call option game be far off? Anyway, the good news at SGMS came in late June when the Co entered the bidding competition to run the Texas lottery; a deal that could pay $100 million per year to the winning bidder. Three are two other companies making proposals. A decision on the winning bid is expected by late September. Also in June SGMS got a Brean Murray upgrade from ‘hold to ‘buy’ and I’m going to run with that. Whether SGMS wins the lottery deal or not; at its current price, with its market share, and its generation of revenues, the Co is a short-term (6 Mo) ‘Buy’ consideration for me.

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Next up this morning we have L & L Energy Inc., (LLEN) http://www.lnlinternational.com/ that is currently trading in the $8.76 range on a 3-Month average daily trading volume of 689,508 shares. LLEN has a 52-week high of $14.91 set on 04-07-10 with current trailing twelve month revenues of $85+ million and a positive, corresponding diluted EPS of +$0.94. I really like those earnings. LLEN is in one of those unglamorous businesses that will be around for a very, very long time regardless of its fashion: Coal Washing. LLEN is located in China. LLEN has an 80% equity interest in the DaPuAn and SuTsong mines, which are located in the Yunnan Province, as well as owns interests in the DaPuAn coal washing facilities. In mid-June LLEN said its third coal washing facility in China became operational. The new facility can wash as much as 600,000 tons of coal per year. Seattle-based LLEN said that at full capacity, the new facility could bring in $78 million in revenue per year assuming a washed coal price of $130 per ton. LLEN is a long-term (1 Yr) ‘Buy’ consideration for me.

Finally this morning we have Crosstex Energy Inc., (XTXI) http://www.crosstexenergy.com/ currently trading in the $6.07 range on a 3-Month average daily trading volume of 560,914 shares. XTXI has a 52-week high of $9.94 set on 03-03-10 with current trailing twelve month revenues of $1.54 billion and a positive, corresponding diluted EPS of +$0.41. I like those earnings and as I remarked about the SGMS ratio: XTXI has $1.54 billion in revenues for a $6 stock. As of March 2, 2010, XTXI operated approximately 3,300 miles of gas and oil pipeline, 9 processing plants, and 3 fractionators.  At its current price, XTXI is a short-term (6 Mo) ‘Buy’ consideration for me.  XTXI will hold its Q2 ’10 earnings call on August 8.

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Disclosure: No Position