How well?

The International Securities Exchange SINdex (SIN), an index that solely tracks “sin” stocks, is up more than 30% since January…

This compares to the S&P Retail Index’s gain of just 15%. Against the broader S&P 500 Index, it’s done even better: up nearly 40% in just the past two months. And it’s up nearly 88% since its March low.

Perhaps your personal philosophy isn’t inclined toward vice or sin stocks. And that’s fine – there are plenty of other sectors that are performing well these days.

But for those who want further diversification in a sector that’s highly recession-resistant, you might want to consider investing in a vice or two (as opposed to engaging in them).

Sin Stocks: Rolling the Dice on One of the Biggest Casino Operators in the World

Take casino stocks like Las Vegas Sands (NYSE: LVS), one of the world’s largest developers of integrated, multi-use resorts.

• The company operates the Venetian, the Sands Macao, the Palazzo Resort-Hotel-Casinos, the Sands Expo and Convention Center, and the Venetian Macao in the People’s Republic of China Special Administrative Region of Macao.
• Additional properties under development include the Cotai Strip, a master-planned development of resort casino properties in Macao, the Marina Bay Sands in Singapore, the Sands Bethworks, Pennsylvania’s first gaming resort destination in Bethlehem, PA and the a leisure resort complex on Hengqin Island in the People’s Republic of China.

As of this writing, shares of the Sands have soared 488% from its March low. Even after that impressive run-up, the Sands shares still trade nearly 92% BELOW their $138.93 high of October 2007.

Nine out of the 11 brokerage firms that follow the Sands shares don’t like the company’s prospects, and rate it at a “Hold” or worse. But brokers tend to take short-term views, particularly when things are at their worst.

With Las Vegas Sands, the news is fairly bleak. The company announced a wider than expected quarterly loss earlier this month, as the economic downturn kept travelers and gamblers sidelined at home.

But bad news and any resulting pullback in the shares make great points to establish a position in this former high-flyer.

Chairman and CEO Sheldon Adelson thinks so too, and he had this to say on the earnings conference call:

“We have witnessed recent positive trends in gaming volumes and an improving environment for future group business bookings – especially into later 2009 and early 2010 – which, together with the full implementation of our cost-savings program, should benefit our Las Vegas performance going forward.”

Sin Stock Investing: Soaring Spirits & Liquid Gains

Another robust company to consider when investing in sin stocks is Central European Distribution Corp. (Nasdaq: CEDC), one of the leading integrated spirits beverage businesses operating primarily in Europe.

• The company produces over nine million cases of vodka annually in Poland for export. And it imports spirits, beer and wine into Russia, Hungary and Poland. The company sports an impressive lineup, with over 700 brands distributed in Poland and elsewhere.
• Since 1999, the company has been on an acquisition spree, snapping up over 23 companies and their brands, primarily financed through shares of stock in the parent company.

It seems to be working: Shares are up a blistering 321% since its March lows, in spite of poorer than expected quarterly results (primarily the consequence of expenses associated with two acquisitions in March and May).

As economic conditions improve, shares should continue to reflect the accretive effects of the acquisitions.

An Entire Portfolio of “Sin Stocks “

These are just two of many excellent buys in the sin stocks sector. Investment U Chairman Alexander Green has spent much of his time researching vice investing recently because of the opportunities these stocks offer.

His research showed that vice stocks have historically been huge market out-performers during recessionary times.

Yet – and this is what really had his alarm bells ringing – they had badly underperformed during the recent downturn.

And so – to our Oxford Club subscribers – he unveiled the Seven Deadly Sins Portfolio to capitalize on an expected rebound in this sector.

And that’s exactly what’s happened.

Barely more than two months old, the Seven Deadly Sins Portfolio is already up over 60%. (For comparison purposes, that’s equivalent to the average money market compounding at current rates for the next 100 years.)

Not surprising: All of our positions are profitable. Want to learn more? Consider subscribing to The Oxford Club.

Good investing,

David Fessler

Source: Sin Stocks: 2 Profitable Vice Investments Soaring Despite the Recession

Las Vegas Sands (NYSE: LVS) and MGM Mirage (NYSE: MGM) rocketed to triple-digit gains in just a few short weeks.

Las Vegas Sands, the owner of the popular Venetian Hotel in Las Vegas, found its stock absolutely gutted in 2008, dropping from well above $100 per share down to single-digits. Investors fretted over the company’s massive debt, and concerns regarding Las Vegas’ “recession proof” economy hitting the skids. But shortly after LVS shares fell to $1.38, a comeback was in the works…

As you can see from the chart above, the gaming industry’s 2009 rebound has been as intense as its fall. Since its lows in March, shares of Las Vegas Sands have rocketed more than 400%!

LVS let its share price out of the basement by restructuring portions of its debt. In April, the company released news of a $5 billion credit pact amendment that would allow the company to repurchase up to $800 million of its outstanding loans.

But can these amazing casino comeback stories continue? Or should investors take their money off the table?

Why It’s Time to Book Your Gambling Profits…

While LVS stock may have turned a corner, the company itself continues to have issues it needs to work out…

First, its international business segment could be in for a rough ride. LVS already is exploring deals where it would sell its Macau casino for $1.3 billion — then lease back the lavish building from the new owner, opting for a performance-based rate.

This could be a crucial deal for LVS, considering how bad things are getting in the Far East’s gaming capital. Travel to Macau was down nearly 10% during the first quarter compared to Q1 2008 numbers. That’s a fairly significant drop off.

Then there’s the company’s debt situation. For highly leveraged companies– such as those in the gaming industry — a deep recession could bring a firm to the brink of bankruptcy. It remains unclear whether LVS and other prominent casino companies will be able to stay on top of debt obligations. Simply put, one bad quarter could spell disaster for LVS—and its shareholders.

MGM Mirage is another gaming stock struggling with immense debt. Earlier this month, MGM completed a $1 billion stock offering in an attempt to relieve some of the pressure caused by the $14 billion in debt riding on its balance sheet.

As far as we’re concerned, both of these stocks pose significant risks to investors right now. The success of the gaming industry is too closely connected to business travel and tourism. Both are suffering and at the mercy of the recession. If a quick recovery is not in the cards, there could be plenty of pain left for LVS and MGM.

If you bought either of these names recently, you’re probably up big. Don’t get greedy — now’s the time to cash out. If the Las Vegas convention and gambling industries continue to suffer, the worst may be ahead of LVS and MGM…

Best,
Greg Guenthner

Source: Will the Las Vegas Comeback Continue?

To stay in Vegas, you’d have to get to Vegas. And that costs money no-one is willing to spend right now. Accordingly, the supposedly recession-resistant vice stocks are taking it on the chin. Just yesterday [Thursday], we claimed our own 25% short profits share from the collapse of Las Vegas Sands (LVS) share price.

Today, I’d like to direct your attention to Wynn Resorts, Limited (NASDAQ:WYNN).

When it came to the subject of Macau, casino mogul Steve Wynn said on Wednesday: “The central government and the Macau government putting a crimp in or a slowdown in visitation was an attempt to give the community a chance to absorb the stuff that had been built.”

But that really makes no sense at all. Revenue growth has slowed as global recession and new travel restrictions on mainland Chinese tourists have hit all Macau casinos. Allowing “the community to absorb” new casinos doesn’t bring renminbi, yuan or dollars into the till. And the outlook that this may change is getting dimmer by the day:

Citi just downgraded Ctrip.com International, Ltd. (NASDAQ:CTRP), China’s premier travel service provider for hotel accommodations, airline tickets and packaged-tours in China. Analysts reduced it from a Buy to a Sell, slashing its price target from $53 to $18. We dipped below that price this morning.

If the outlook for the company who’d make a mint off shuttling Chinese gamblers to Macau is lagging… when China is lathering a good third of its currencies reserves into work-creation programs (infrastructure investment is nothing else!)… and when the companies responsible for China’s prosperity are closing at a record pace… it is time to bail.

WYNN is currently trading at around $30.15, down a hundred bucks from its 52-week high of $137.93, and uncomfortably close to its 52-week low of $28.06. Other than $3 LVS, WYNN still has a decent height to fall from.

I say short it at current levels, for gains of 15-20% by New Year’s. Cover at $33 should there be an upward bounce.

Source: After LVS, Wynn set to lose

The stock currently is down between 10-11% since the open, trading around $4.50… that would get us out with a gain of -23% over our November 14 entry.

I’m just about ready to see some black again on our portfolio. There may be a sucker born every minute, but even a sucker requires some spare cash to blow on blackjack and hookers in Vegas. In this case, I bet on black… take profits now!

Source: Cover Your Shorts on Lav Vegas Sands (LVS) and Take 20-some Percent Profits

This from Today’s Financial News:

Despite the substantial drop in the U.S. equity markets, Las Vegas Sands Corp. (NYSE:LVS) gained over 9% today. The company is currently in talks with a syndicate of banks to raise between $1.5 billion and $2 billion to finance new casino projects in Macau. The company had suspended construction on its expansion into Chinese gaming, laying off most of the 11,000 construction staff.

The stock price has dropped from over $122 last December to just above $6 today.

We think Sands is the new GM: Obtaining credit to finance the Macau project at this point is a self-defeating target. By the time the money comes in, the Chinese gaming market will be just as hard-hit as Vegas. There may be room for another 10% gain in the next weeks. More likely, the company will blow past its 52-week low of $4.32 before November is over.

Since I first wrote about this stock on August 19, 2008 (“The House always wins: Investors lose big with MGM Mirage (MGM), Las Vegas Sands Corp. (LVS), Wynn Resorts (WYNN)”), the price has dropped from $50.93 to below $5.

Short it again, for 20-30% gains by mid-December!

Source: The long dying of vice stocks: Short Las Vegas Sands (LVS) for 20-30% gains!

This from Smart Profits Report:

From late 2005 until about a year ago, gaming and casino stocks racked up huge gains – especially those with a strong presence in Macau. These include Las Vegas Sands (NYSE: LVS), Wynn Resorts (Nasdaq: WYNN), and the MGM Mirage (NYSE:MGM).

Since late 2007, however, these stocks have endured a huge drop, losing 70% to 90% of their value. Casino-related stocks such as International Game Technologies (NYSE:IGT) and Shuffle Master (Nasdaq:SHFL) have also lost a good chunk of their value.

For China, allowing some U.S. casinos to enter the Macau market is a big deal. This paves the way for further penetration into the Asian markets, which is why the casinos mentioned above did so well from 2005 to 2007.

I don’t think it’s a coincidence that these three casino stocks made their highs in October 2007 – the same month that the Chinese stock market (SSE Composite) topped out. Since then, the SSE Composite has lost close to 70% of its value.

Chinese Visa Restrictions Stifle The Action Around The Craps Table

So why has this sector endured such a brutal selloff?

There are a number of other reasons, including recessionary pressures, a lack of funding for some of the U.S.-based Macau casinos, plus China’s efforts to limit the number of visas that residents of the southern Chinese province of Guangdong need to enter Macau.

As of October 1, residents now are allowed one trip every three months instead of two months – bad news since Guangdong customers are one of Macau’s biggest revenue sources. This has investors wondering if China has any additional changes in mind, with the uncertainty weighing on these casino stocks.

Until last week, that is…

The Upside And Downside Scenarios For These Three Sector Stalwarts

Last Tuesday, LVS, WYNN, and MGM all made their recent lows. But that was the trigger point for a huge rally, with the stocks then posting gains of 100% to 200% over a four-day period.

Let’s take a quick look at upside and downside…

Upside: Based on the intraday charts, these three stocks probably have higher to go, at least over the near-term.

Downside: The intermediate-term picture is a little hazier. None of the three have triggered daily buy signals yet. Moreover, if the stock indexes are in a bearish consolidation pattern and go on to make new lows, they could give back some, or all, of their recent gains.

However, if the S&P 500 makes new lows, and moves down to the 765 area, and these three stocks do not make new lows with the index, it should represent a good, intermediate-term buying opportunity.

How To Play The Casino Like James Bond

If the gaming and casino stocks have set their lows, LVS, WYNN, and MGM should benefit more than the others.

However, if you want to diversify and spread your risk in this sector, there are a couple of other ways to do it.

Take a look at the Ladenburg Thalmann Gaming and Casino Fund (MUTF:GACFX). Unlike the Market Vectors Gaming ETF (AMEX:BJK), which is less than a year old, I prefer this fund because there is more data to analyze.

Here’s a weekly chart of GACFX, with a regression channel drawn from the October 2007 high.

The top of the regression channel this week is around $5.20, but for each week that passes by, the regression channel drops about $0.15. A couple of weekly closes above the regression channel should be bullish over the longer-term.

Source: There’s Money In This Sector… Literally

Las Vegas Sands stock hit a daily high of $10.97, before paring back to close at $8.91 with an 80% gain of $3.96 each.

The Singapore Tourism Board stopped short of pledging financial support for the project, but said it would “facilitate the success” of the project under construction in downtown Singapore.

“The Singapore Tourism Board is monitoring the situation and is aware that the current uncertain economic climate may give rise to concerns,” the agency board said in an e-mailed statement, Bloomberg News reported. The tourism board said it was “working closely” with Las Vegas Sands’ Singapore unit, Marina Bay Sands.

Las Vegas Sands Chief Executive Officer Sheldon Adelson has been desparate to raise cash as his company’s shares have plummeted more than 91% year-to-date. The gaming industry has been hit hard by dwindling disposable income.

Las Vegas Sands shares have a 52-week high of $148.76, but prior to yesterday’s rise were hovering close to their 52-week low of $4.32.

Adelson has gone so far as to invest $475 million on his own money into the struggling casino company whose flagship properties include The Venetian Resort Hotel Casino (The Venetian), The Palazzo Resort Hotel Casino (The Palazzo) and The Sands Expo and Convention Center (The Sands Expo Center) in Las Vegas, Nevada, as well as The Venetian Macao Resort Hotel (The Venetian Macao) in Macao, China.

While the news of the Singapore government’s support certainly helped to boost Las Vegas Sands stock, some analysts believe the stunning 122% intraday surge can be attributed to short-sellers scrambling to cover positions after the stock’s initial rise.

A similar situation unfolded earlier this week with Volkswagen AG (OTC ADR: VLKAY). [Please click here for a related story in today’s issue of Money Morning on the recent Volkswagen share movements.]

“Gaming is a heavily shorted sector in need of a catalyst,” Todd D. Jordan, a managing director at New Haven, Connecticut-based investment-research firm Research Edge LLC, said yesterday in a note to clients, Bloomberg reported.

Source: Las Vegas Sands Shares Soar After Singapore Deals Itself In

Today’s Financial News editor J. Christoph Amerger says if they are it’s news to MGM Mirage. On Tuesday, the company’s stock had plunged 10% since the casino complex opened.

The reality is the economically depressed may not have the money to fly to Las Vegas. J. Christoph says stay away from this sector…

Financial editors, by and large, are an uninspired lot. Give them a couple of years at their desks and sheer habit of repetition either turns them into incurable gold bugs or into dispensers of cyclical wisdom:

Lather. Rinse. Repeat.

The latter group tends to operate on simple stimulus-response. Call them stock reflexologists if you will. Have a hurricane warning? They turn into oil and gas bulls. Have gold go up by a buck? They start looking for inflation as a reason tyo buy more. Have a 10-20% drop in U.S. stock prices, maybe with an increase in unemployment to, say, 5.7%. They turn Dickensian.

Only that they’re typically young and American enough never to have experienced what an actual economic downturn looks like.

Accordingly, their ideas of how the Common Man reacts to economic adversity often strike me as, well, quaintly suburban.

In this sheltered world, the masses plagued by unemployment “traditionally” turn to “vice”. Much like your average local NPR commentator will blame increased smuggling of cigarettes in Maryland on 4.7% unemployment and “people having to keep their money together,” the stock reflexologist automatically looks at sin stocks.

Alcohol. Tobacco. And Gambling.

Because that’s what them unemployed do…

Then, there is real life: If drifters, grifters, and the involuntarily idle are indeed crowding into casinos, it’s news to MGM Mirage. On Tuesday, MGM plunged over 10% since it opened.

It’s still seven bucks above its 52-week low of $21.65, but the stock chart indicates that this classic sample of a sin and gambling stock is following the overall course of the wider equity markets.

So, by the way, is Las Vegas Sands – down 11%, Wynn Resorts – down 8%, and Boyd Gaming Corporation (NYSE:BYD) – down 8%.

Maybe investors should keep in mind that in real life, the economically depressed may not have the cash to fly to Vegas, either…

Of course, economic downturns do create sector-specific opportunity. They may be a bit harder to find these days, but they are Darn Good Investment (DGI) stocks out in the market right now…. companies with profits, growth, and stunningly low P/Es that can make up for short-term fluctuations with medium-term double-digit gains.

My colleague Laura Cadden has discovered one of these companies… a small aircraft manufacturer that not only increased its revenues by 11% and its net income by 27% in the second quarter over the same time last year. And its backlog actually went up by 9%.

We will release more information on this stock this coming Thursday during our TodaysFinancialNews.com Hot Stock Pick of the Week.

P.S. You can sign up to a Today’s Financial News feed for breaking news, special reports and new financial videos. Sign up through your favorite reader here. Or, if you prefer, have the feed delivered to your email.

Source: The House always wins: Investors lose big with MGM Mirage (MGM), Las Vegas Sands Corp. (LVS), Wynn Resorts (WYNN)

NEW HIGHS OF NOTE LAST WEEK

Halliburton (HAL)… oil services
Patterson-UTI (PTEN)… oil services
Carbo Ceramics (CRR)… oil services
Atwood Oceanics (ATW)… oil services
Key Energy Services (KEG)… oil services
National Oilwell Varco (NOV)… oil services
Spectra Energy (SE)… gas pipelines
U.S. Steel (X)… you guessed it
Schnitzer Steel (SCHN)… scrap steel
Fluor (FLR)… infrastructure
Quanta Services (PWR)… infrastructure
Crude oil, Natural gas, Gasoline, Corn, Soybeans, Cocoa

NEW LOWS OF NOTE LAST WEEK

JetBlue (JBLU)… airline
US Airways (LCC)… airline
Continental Airline (CAL)… airline
MGM Mirage (MGM)… casinos
Boyd Gaming (BYD)… casinos
Wynn Resorts (WYNN)… casinos
Las Vegas Sands (LVS)… casinos
Monarch Casinos (MCRI)… casinos
Winnebago (WGO)… RVs
Thor Industries (THO)… RVs
Fleetwood Enterprises (FLE)… RVs
Goodyear Tire (GT)… tires
News Corp (NWS)… media
Hershey (HSY)… candy
Playboy (PLA)… eye candy
American Express (AXP)… credit cards
Capital One Financial (COF)… credit cards
International Gaming (IGT)… gambling machines
Circuit City (CC)… landfill stuffing continues to suffer
Veolia Environnement (VE)… world’s largest water stock
Honeywell (HON)… conglomerate
General Electric (GE)… conglomerate
United Technologies (UTX)… conglomerate
XM Satellite Radio (XMSR)… satellite radio
Legg Mason (LM)… asset management
Callaway Golf (ELY)… golf equipment
Whole Foods (WFMI)… expensive groceries
General Motors (GM)… read the letter from the Chairman
Lead, Nickel

Source: Brian Hunt’s Market Notes Monday, June 30, 2008