Analysts unveil top casino stock picks

Wednesday, Sept. 18, 2002 | 10:55 a.m.

Wall Street analysts at the Global Gaming Expo Tuesday revealed the following top casino stock and bond picks:

John Mulkey, Bear Stearns & Co. (bonds): Station Casinos Inc.

The Las Vegas-based neighborhood casino operator this week offered financial guidance through 2003 that was in line with expectations, a sign that the company's outlook remains steady. That guidance doesn't reflect a recent deal to manage an Indian casino near Sacramento that could yield as much as $35 million in cash flow next year.

Harry Curtis, J.P. Morgan & Co. (stocks): Station Casinos Inc., Mandalay Resort Group

Mandalay Resort Group's convention center at Mandalay Bay, expected to debut in January as one of the largest meeting centers on the Strip, will allow the Las Vegas-based company to capitalize on the expanding convention business.

Larry Klatzkin, Jefferies & Co. (stocks): Kerzner International Ltd.

The Bahamas-based luxury casino resort operator has a lucrative relationship with the Mohegan Sun tribal casino in Connecticut as well as an opportunity to expand its gaming business, now a relatively minor percentage of the company's operations.

David Anders, Merrill Lynch & Co. (stocks): MGM MIRAGE

The Las Vegas-based company, an industry leader and dominant Strip operator, is poised to reap rewards as leisure travel picks up again.

John Kempf, Goldman, Sachs & Co. (bonds): Las Vegas Sands LLC

Las Vegas Sands' hotel tower under construction at The Venetian hotel-casino on the Strip could yield high returns for the company, as could its upcoming investment in the Chinese island resort region of Macau. At least half of the company's rooms go to convention-goers, a traditionally stable source of business for the casino industry.

Robin Farley, UBS Warburg (stocks): International Game Technology, Argosy Gaming Co.

Illinois-based Argosy is in growth markets where prospects are good despite the effect of recent tax hikes. Reno-based IGT, the world's largest slot machine maker, could benefit this November as states consider measures to permit gaming.

Marc Falcone, Deutsche Bank Securities (stocks): Station Casinos Inc.

Las Vegas' strong rebound from last year is a testament to the resiliency of the market.