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?

The recession has hit consumers hard. And many have cut their spending, doling out their dollars for the necessities: food, shelter, clothing and gasoline – but little else.

To say business has been bad doesn’t really capture the scope of the damage.

• It’s easy to see the effects on casinos – the top dogs in most markets – and we don’t always notice the impact to the rest of the food chain.
• Restaurants have plenty of empty tables these days. Those little beepers you get while waiting in line are just sitting around collecting dust.
• Malls resemble ghost towns; most of the visitors are store employees themselves. Many of the weekend customers are teenagers, with little more to spend than time.

That’s why it’s so surprising to find a company that’s doing well, much less a casino.

Amidst all of this economic devastation there are companies who have been holding their own and putting up impressive earnings figures. We’ve found one casino stock in particular that has a unique business model of drive-to locations that’s been succeeding where Vegas hasn’t.

Casino Stocks Drop As The Travel Industry Suffers

The travel industry is suffering right now. And while it’s put a bite on tourism, it’s hurt most casinos much worse.

And no place got hit harder than Las Vegas. “Sin city” experienced a 10% drop in visitors in January and February. Unfortunately, that’s the good news. Gaming revenues were a paltry $937 million, down almost 20%.

More visitors equal more spending in the gambling capital of the world.

And when you consider that over 37 million visitors go to Vegas every year, a 10% drop equates to 3.7 million people not adding tens of millions to the economy – or a casino’s bottom line.

As the infamous strip has grown, mega-casinos have popped up as well with each casino supporting thousands of workers and capable of adding billions to their parent company’s bottom line. A 20% drop in revenue for many casinos means that they aren’t able to pay their fixed expenses.

That sobering statistic has translated into a huge problem for many of the gaming companies, who now find themselves scrambling to stay solvent. They’ve laid off thousands of employees and slashed expenses in an effort to stem the red ink.

But it hasn’t been enough: Las Vegas-based MGM Mirage (NYSE:MGM), Riviera Holdings (AMEX:RIV) and Station Casinos are all in discussions with their lenders and bondholders. The topic? Missed debt payments.

Station Casinos missed a payment last week, and Riviera missed a $4 million interest payment on its $25 million line of credit on March 30.

Casino Stocks – It’s All About Location, Location, Location…

At first glance, you might think all gaming companies and casino stocks are in similar straits. But they’re not. An important difference sets at least one of them apart: casino location.

Not too surprisingly, with fewer people willing to shell out money for airline tickets, a greater percentage of Vegas visitors are coming from drive markets like Southern California.

It’s not that people don’t want to gamble – they just don’t want to shell out hundreds or thousands of dollars for plane tickets to get there.

So it stands to reason that if we wanted to “invest in sin,” we should take a look at gaming operators who own casinos primarily served by drive markets, whether it be Las Vegas or elsewhere.

Ameristar Casinos, Inc. (Nasdaq: ASCA) isn’t the biggest casino operator, but it’s certainly one of the most profitable. None of its eight casinos are in Las Vegas, and all of them cater to local, drive-to clientele.

• Cactus Pete’s and Horseshu are both located in the town of Jackpot, Nevada – a popular recreational vehicle destination in the northeastern part of the state. With a full hookup RV park right next to the casino, Cactus Pete’s – the largest gaming and entertainment destination in northeast Nevada – allows RV gamblers easy access to casino facilities.
• The Ameristar Casino Hotel in East Chicago, Indiana – one of the largest casinos in the Midwest – is a short drive for its Windy City clientele.
• The company recently completed a 130,000 sq. ft. addition to its casino in St. Charles, Missouri. With its seven restaurants, Resort Spa St. Charles is a short 20-minute drive from downtown St. Louis.
• The company’s Kansas City, Missouri 3.5-acre casino floor features more than 3,000 slots, 105 gaming tables, 12 restaurants, an 18-screen movie theater complex and a Kid’s Quest childcare facility. And it’s a mere five minutes from downtown.
• The Council Bluffs, Iowa crowd need only head down to the Platte River, where three full decks of gaming await on the largest riverboat casino in Iowa. Ameristar also owns a large land-based AAA 4-Diamond hotel adjacent to the riverboat.
• The company’s Casino Black Hawk is located about 70 miles from Golden, Colorado. A major regional gaming and entertainment destination, the Black Hawk complex, sports a 1,550-space parking garage, one of the largest in the area.
• The Casino Hotel Vicksburg, another riverboat casino located on the mighty Mississippi, is the largest dockside casino in the southwest part of Mississippi. Number one in its market for the past several years, this facility sports a colorful blues bar and a state-of-the-art gaming center.

Casino Stocks: Ameristar’s Business Model Is Working…

So how well is Ameristar’s “drive-to” business model working? Quite well, thank you. Last quarter, it achieved record earnings – chalking up $0.52 per share – compared to a net loss of $1.07 for the same quarter in 2008.

“Ameristar achieved record EPS in the first quarter,” said Gordon Kanofsky, Ameristar’s Chief Executive Officer and Vice Chairman. “This was largely because of our sustained emphasis on achieving operational and marketing efficiencies, particularly during the current recession.”

Even more impressive, the company achieved these results on revenues of $315 million, $10 million lower than the previous year.

To experience a decline of only 2.7% when the rest of the industry’s looking at 20% declines speaks to the validity and diversity of the company’s business model.

Since most of the casinos are located in travel destinations, hotel occupancies remain high, offsetting small declines in gaming revenues.

The company remains well capitalized, having recently amended its credit facility with its lender through 2012.

CEO Kanofsky commented on the company’s future outlook: “Despite expected continued difficult economic conditions in 2009, we believe Ameristar is well positioned to continue to drive year-over-year margin growth.

“We also believe that regulatory reform in three of our key markets – coupled with significant investments in two of those markets – should drive future revenue growth, enabling Ameristar to emerge from the recession stronger and more profitable.”

We wholeheartedly agree. If you’re looking at investing in sin through casino stocks, Ameristar Casinos sports some of the best odds outside of Las Vegas.

Good investing,

David Fessler

Source: Casino Stocks: The One Sin Stock You Should Be Betting On

The problem, of course, is that if manufacturers can’t borrow to buy from suppliers, and wholesalers can’t borrow to buy from manufacturers, and retailers can’t borrow to buy from wholesalers, then consumers can’t get auto loans, credit cards, and mortgages.

The economy faces a serious headwind.

The companies in the toughest position, however, are those that are highly leveraged. Even though interest rates have fallen substantially, they aren’t able to access the credit markets (at reasonable rates) or increase their bank lines to get the liquidity they need.

And therein lies an enormous opportunity for investors like you and me – profiting from corporate takeovers.

Corporate Takeovers – Solid Companies vs. Weak Competition

Companies that have solid balance sheets and high levels of cash are now in a position to scoop up their weakened competitors through corporate takeovers. That allows them to purchase assets on the cheap and potentially increase their profit margins – by eliminating the competition – at the same time.

Let me give you a few examples.

• In the U.S. recently, drug giants Merck (NYSE:MRK) and Pfizer (NYSE:PFE) have unveiled deals to buy Wyeth (NYSE:WYE) and Shcering-Plough (NYSE:SGP), respectively.
• Chinese companies, backed by the dollar-flush Chinese government, have been on a shopping spree lately. Already this year, Chinese firms have announced more than 300 takeovers totaling nearly $68 billion.
• In the pharmaceutical industry, there is plenty of fair game. Many small biotechs, for example, are running out of capital. This dovetails nicely with Big Pharma’s shrinking drug pipelines.
• The gaming industry, too, is hurting bad. For instance, credit downgrades and potential bankruptcy hang over companies like MGM Mirage (NYSE:MGM) and Harrah’s. But Penn National (NASDAQ:PENN) is in a fine position to buy them or other weakened competitors.
• Look at the oil equipment leasing industry. Nabor Industries (NYSE:NBR) carries $4 billion in debt. (Earlier this year it had to pay 9.25% to raise $1.1 billion.)
• But Patterson UTI Energy (NASDAQ:PTEN) is laughing all the way to the bank. Its sound financial condition – and zero debt – are allowing it to invest millions in new equipment.

When the price of oil rebounds who will be in the best position to prosper? Clearly, it’s Patterson. That forces Nabor to at least consider the idea of putting itself up for sale.

This same corporate takeover scenario is playing out in multiple industries in markets all over the world.

How Many Potential Corporate Takeover Candidates Are In Your Portfolio?

Yet when I ask investors how many potential corporate takeover candidates they have in their portfolio, more often than not they simply shrug their shoulders and say “none.”

That’s unfortunate. Investor’s Business Daily recently reported a survey of institutional investors conducted by Boston Consulting. Over 80% of them agree that the current market represents a “once in a lifetime” opportunity for corporate takeovers.

My advice? Don’t rest on your laurels. Buy a handful of potential corporate takeover targets now – before all the new deals starting popping.

Good investing,

Alexander Green

Source: Corporate Takeovers: ‘Once in a Lifetime’ Investment Opportunities

• Royal Bank of Scotland plc (ADR:RBS) said it may eliminate as many as 9,000 additional jobs to curb costs and repay $3.7 billion in government bailout money over the next three years. The bank said the actual number of losses may be “significantly lower” because of efforts to shift employees to new positions, Bloomberg reported.
• The number of delinquent mortgages rose 7% in February, with 39.8% of subprime borrowers at least 30 days behind on their mortgage payments, Dann Adams, president of U.S. Information Systems for Equifax Inc, told Reuters. “I’m trying to find optimism in these numbers, but I’m pretty hard pressed to do that,” Adams said.
• After contract negotiations stalled, Rio Tinto Group PLC (ADR:RTP) offered Asian steelmakers a 20% discount on its iron ore, well below the 40% to 50% discount Chinese steelmakers demanded, four executives close to the deal told Bloomberg. Some Chinese mills already rejected the offer from Rio, the world’s second-largest iron ore producer.
• Retailers are expected to post a 0.3% drop in same-store sales in March. Excluding Wal-Mart Stores Inc. (WMT), that figure would be a 4.7% drop, according to Thomson Reuters data. “We don’t see any signs of significant improvement with the exception of a continued full-fledged flight to value retailers,” said Craig Johnson, president of Customer Growth Partners, a retail research firm.
• The number of Latin American companies whose ratings have negative outlooks or are under review for a downgrade has jumped to 23% from 10% in September and more than half have “high exposure to funding risk,” Moody’s Investors Service reported yesterday (Tuesday).  The region’s companies are struggling to refinance debt as the financial crisis reduces access to credit and slowing economic growth crimps earnings, according to Moody’s, Bloomberg reported.
• A survey of U.S. chief executives released yesterday (Tuesday) showed two-thirds plan additional layoffs and expect sales to decline in the next six months as their confidence in the economy continues to fall, Reuters reported. The Business Roundtable’s quarterly CEO Economic Outlook Index fell to negative 5 – the first negative reading in the survey’s six-year history – and down from a fourth-quarter reading of 16.5. A reading below 50 means CEOs expect contraction rather than growth.
• Private equity firm Colony Capital LLC is in talks with MGM Mirage (MGM) to help refinance the casino company’s debt, two people with knowledge of the discussions told Bloomberg. Colony may invest as much as $750 million in corporate debt secured by a lien on one or more of MGM Mirage’s casinos, the anonymous sources said.  An investment in CityCenter, MGM Mirage’s unfinished Las Vegas Strip project with Dubai World, is unlikely.
• Worldwide sales at Audi fell 10.7% in March from a year ago, but the German carmaker managed to increase sales in China, Reuters reported Monday. Audi, a Volkswagen AG (OTC:VLKAY) unit, sold 90,400 cars worldwide in March as sales fell 12.9% in Western Europe but rose 6.6% in China. “The trend is positive: Our monthly results have been continually improving since January,” said Peter Schwarzenbauer, the manager in charge of marketing and sales at Audi.

Source: Global Investment News Briefs Wednesday, April 8, 2009

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

William says every successful investor needs a China investing strategy, despite the fact that China’s benchmark index, the Shanghai stock index, is down 56% so far this year.

Following Jim Rogers’ bullish comments on China in a recent exclusive interview with Money Morning, Bill gives six reasons to invest in China and five solid China profit plays.

In an exclusive interview with Money Morning, global investing guru Jim Rogers said that giving up on that country now would be like selling all your U.S. stocks at the start of the 1900s – before America created massive wealth by evolving into a world superpower.

“I have never sold any of my Chinese companies,” Rogers said. “You know, selling China in 2008 is like selling America in 1908. Sure, let’s say the market goes down another 40% – so what! You look back over 100 years, you look back from the beauty of 1928, or even 1938 [in the depths of the Great Depression], and there is somebody who bought shares in 1908. He was still a lot better off having not sold in 1908.”

Even if the U.S. economy skids into a recession, China’s long-term growth outlook remains strong – and that’s after nearly 30 years of double-digit growth that country has already logged.

Here are some of the key points – as well as some profit plays – to consider:

First, China remains one of the strongest economies in the world. Even after China reduced its growth outlook, the country remains on track for an economic expansion of better than 9% for the year to come. We aren’t so naïve as to expect a straight path of uninterrupted growth. But neither do we expect a U.S. downturn to squelch the Red Dragon’s long-term growth prospects.

For broad exposure to China’s growth, consider the China Region Opportunity Fund (USCOX), managed by the San Antonio-based U.S. Global Investors Inc. (GROW).

Second, China remains awash in liquidity, with $1.68 trillion in foreign reserves. And much of that excess capital is being focused on the upside, particularly when it comes to boosting disposable income and then building brand awareness for its own products.

And now that liquidity is allowing the country to go on a global shopping spree, enabling its companies and its state-run sovereign wealth funds to pick up such choice assets at bargain prices. One beneficiary of such outside capital: Companies such as MGM Mirage (MGM), which is being positioned as a high-profit play on China.

Third, China’s markets are quickly becoming much “narrower.” Money is being reallocated from highly risky ventures into more-predictable enterprises. That’s an important trend for investors to track, for history shows time and again that these more-predictable ventures fare the best during uncertain, volatility-laced markets. One advantage that these companies have, believe it or not, is that they don’t have to tap into the credit markets at a time when credit is costly, or not available at all. Weaker companies won’t be able to get financing, even if it is available. Consider such potential “New Dragon” companies as online media player SINA Corp. (SINA) or fast-growing advertising play Focus Media Holding Ltd. (ADR: FMCN), for instance. As the economy becomes more “normalized,” consumers will increasingly need such products as insurance, so take a look at China Life Insurance Co. Ltd. (ADR: LFC).

Fourth, many of China’s companies are now reporting real profits. For decades, most Chinese companies operated on the slimmest of margins, with profits that were actually based on taxes or export-incentive “loopholes.” They were kept on life support with an endless stream of bank loans. All of this is being eradicated by Beijing. Money is being taken out of highly risky ventures, or the uncompetitive, state-run enterprises that are ridden with debt. In China, that capital is now being redeployed into the innovative, more-promising ventures that we refer to as the “New Dragons” – many of which are destined to rival the U.S.-based “Global Titans” as the dominant global brands and investor stalwarts of tomorrow. One New Dragon that’s already making a global splash is solar-energy player First Solar Inc. (FSLR). Also consider Huaneng Power International Inc. (ADR: HNP), the domestic China power producer that’s also getting involved in projects outside its home market.

Fifth, the still-weak U.S. greenback will make brand-name imports (both products and services) even more popular in China. And rapidly growing consumer income will give China’s consumers the cash to spend on such one-time luxuries as travel and tourism. One big beneficiary: The Boeing Co. (BA) of the United States, which says that China and other Asian nations will need $340 billion worth of new aircraft over the next two decades.

Sixth, look for companies that generate revenue “from” China, even if they’re not based “in” China. This is a great risk-management strategy: It’s a way for investors to profit from China, while enjoying the investor protections and regulatory oversight of such developed markets as the United States and Europe. The Global Titans are our No. 1 choice here. Many pay a dividend, as well.

If you’re seeking some solid, specific picks, some of the best ones to consider include PepsiCo Inc. (PEP), Diageo PLC (DEO), Yum! Brands Inc. (YUM), McDonald’s Corp. (MCD), The Coca-Cola Co. (KO), and a few others.

The bottom line is this: These days, and forever more, every investor has to have a China investing strategy. And while choosing to sit on the sidelines certainly qualifies as a strategy, remember this: Over the long haul, it’s probably not a profitable plan to follow.

P.S. The first part of this two-part story, Why Every Investor Should Have a China Investment Strategy, appeared in the Aug. 8 issue of Money Morning.

Source: How to Profit From A China Investing Strategy

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

William says that investment risks in this massive project are limited by the government’s financial backing. Though most local companies are not publicly traded (or not in the US, at least), he says there are several ways for US investors to ride the boom…

Three Ways to Profit From the Biggest Airport on Earth

By William Patalon III

Crude oil and jet-fuel prices are in the stratosphere, many of the world’s top airlines have ordered severe cutbacks, and air passenger traffic is falling. so why is Dubai funneling 82 billion of its petrodollars into an aerospace project that includes plans for the world’s largest airport?

The answer is simple. Dubai isn’t concerned about the near-term turbulence that has sent global investors diving for cover and induced airline-industry executives to hanger portions of their jetliner fleets.

The leaders of that Middle Eastern country have taken a long and studious look at the powerful global trends that are destined to play out over the next 20, 30 or even 40 years, and have crafted their plans accordingly.

In a broad sense, that focus on the long term is a lesson U.S. investors would be very smart to follow.

So, let’s take a close look at how well Dubai’s financerati have thought this through. We’ll look at some moves you can make to profit alongside Dubai. And I’ll even let you in on a surprise conclusion about this project that we’ve reached here at Money Morning – that I can virtually guarantee you’ve yet to hear anywhere else. Perhaps you’ll be the enviable “person in the corner surrounded by a crowd” at the next dinner party you attend.

The Lowdown on a High-Flying Nation

Dubai is situated on the Southwest Coast of the Persian Gulf and is one of six jurisdictions that make up the United Arab Emirates, a member of the Oil Producing and Exporting Countries (OPEC).

Although Dubai built its economy on a foundation of petro-gusher dollars, “black gold” has become an increasingly smaller component of its market muscle. Right now, in fact, oil and natural gas account for only about 6% of Dubai’s estimated $40 billion economy, and some experts predict that its crude-oil reserves will be exhausted in about 20 years.

As ominous as that sounds, Dubai leaders apparently don’t see that as a catastrophe in the making. Today, the biggest pieces of this emirate’s economic might are based on foreign trade (16%), seaport or airport-located duty-free trade zones known as entrepot (15%), and financial services (11%), although real-estate development, construction and tourism are closing the gap quickly.

“Dubai had less oil than [neighbor] Abu Dhabi [and needs] to create jobs for the population,” Richard Aboulafia, an industry consultant with the aerospace-management company, The Teal Group, told MarketWatch.com. “This is them saying: ‘Let’s convert our oil money into something tangible’.”

Said Keith Fitz-Gerald, investment director for Money Morning: “What we’re seeing here is the emergence of an entirely new economy where the world least expected it. This is absolutely progressing much faster than anyone ever expected. And, to borrow an expression from an old movie, ‘There may be a new sheriff in town’,” as global sovereign wealth funds potentially supplant Wall Street as the primary financing vehicle for the world markets.

Consulting giant McKinsey & Co. estimates that Persian Gulf economies will have to create more than 4 million jobs for its own citizens in the next 10 years. The aerospace sector could account for as many as 350,000 new positions by 2015, McKinsey says.

In very recent years, the country has gained a reputation for doing things in a big way, sometimes even past the point of excess. Dubai is already home to the world’s largest mall, biggest indoor ski resort and tallest building – as well as the world’s only “seven-star” hotel, the boat-sail shaped Burj Al Arab, a luxury hotel built on an artificially created offshore island, and a building whose reach of 1,053 feet makes it the tallest structure being used as a hotel anywhere on earth.

And don’t forget “The World” itself, a much-ballyhooed manmade archipelago of 300 islands (situated in the shape of a world map). Most of the individual patches of land were to fetch $15 million to $50 million – although one of the islands was reportedly priced at $250 million.

Currently, an estimated $300 billion in construction-and-development projects are under way in Dubai.

Dubai Takes to the Skies

Dubai’s aviation vision reaches back several decades. But it’s only really reached a critical mass in the past couple of years. Dubai-based Emirates Airlines is currently the world’s fastest-growing carrier. And that fast-climbing rate isn’t because Emirates is growing from a small base.

Indeed, with 180 jetliners, worth an estimated $58 billion, on order, Emirates has become such an industry heavyweight – especially when other top carriers are cutting their fleets – that U.S.-based Boeing Co. (BA) and pan-European aerospace giant Airbus SAS have actually catered elements of multi-billion-dollar airliner-development programs to the needs and demands voiced by Emirates execs.

“The Middle East is taking over the aerospace industry and Dubai is at the heart of it,” Doug McVitie, an aerospace consultant with Arran Aerospace, told MarketWatch.com recently.

And that’s not just because of the major petro-bucks Emirates has at hand. It’s also because of how well the many pieces of Dubai’s growth strategy fit together.

Right now, globalization is the single most important business-and-economic trend unfolding in the world today. And thanks to that globalization – as well as advances in aerospace technology – the sheikdom whose proximity to India and willingness to slash trade taxes made it one of the Gulf region’s key trading outposts back in the 19th Century, once again finds itself at an opportune geographic nexus: From Dubai, it’s now possible to fly nonstop to the West Coast of the United States, or to the Far East – making it the logical stopping-off point for travelers flying between those two points.

“They have a geographic advantage that no one else has,” Diogenis Papiomytis, a commercial-aviation consultant with Frost & Sullivan, told MarketWatch.com. “Within 8,000 miles, they can reach something like 80% of the world.”

Emirates Airlines is reaping the benefits – and in a huge way. Last year, its profits soared 54%, reaching $1.45 billion. Sales jumped 32% as the airline carried more than 21 million passengers – an increase of 21% from the year before.

Right now, the Dubai carrier is watching its business grow at an annual clip of 15-18%. At that pace, and with the help of the passenger and cargo growth other carriers are experiencing in Dubai, Emirates Chief Executive Officer Maurice Flanagan says Dubai International will eventually overtake some of the world’s top airport hubs.

Overall, the existing Dubai International Airport had 34 million passengers – just about half that of the Global Top 3 of Atlanta’s Hartsfield-Jackson (85 million), Chicago’s O’Hare International (77 million) and London’s Heathrow International (67 million).

That’s why Dubai has decided to shoot for the moon and build the world’s biggest airport. A $33 billion development itself, the new Al Maktoum International Airport at Jebel Ali will have six parallel runways and will be able to handle 120 million passengers a year when it’s finished in 2015.

Holding Out For New Opportunities

But the airport itself is only a part of this $82 billion initiative. Dubai wants to become a global aerospace leader. And it’s deploying the Middle East’s favorite business weapon to do so – the holding company.

Middle Eastern players such as Dubai, Kuwait, Abu Dhabi and others use holding companies – financed by government-controlled sovereign wealth funds – as the investment-and-acquisition vehicles to achieve their economic objectives. Dubai, through its Dubai World holding company has been especially adept at using the holding-company strategy as an economic-development vehicle. And the emirate has created a new company, this one called Dubai Aerospace Enterprise, or DAE, which is to focus on the air-transportation sector.

DAE has already shifted into high gear, first recruiting former Honeywell Aerospace CEO Robert Johnson as its top executive and then establishing a number of operating subsidiaries – such as DAE University for training some of the 24,000 pilots the Gulf region will need in the next decade, and DAE Capital, which is buying and leasing aircraft to carriers throughout the world.

Dubai’s grand vision calls for the new airport to become an aerospace metroplex: It will be bigger than all of Hong Kong, and will consist of six different “zones,” each with a different focus. Operations will include service and storage facilities for aircraft and cargo, production and assembly operations for aircraft components, and venues in engineering, training, and airport operations.

Though some analysts expressed concern about the risks and the poor timing, you can bet that this venture won’t fail. It’s not a profit-and-loss situation, given that its “investors” include the government-run Dubai International Capital sovereign fund, Dubai construction heavyweight EMAAR Properties PJSC, and the Dubai International Financial Centre, a 110-acre free-trade zone and international financial exchange.

Said the Teal Group’s Aboulafia: A lack of profitability “doesn’t matter. They are not a profit-and-loss-operation. They will scream until they’re blue in the face that they are not subsidized, but all the working capital comes from the government.”

Here’s the surprising fact: Long-term, this project may turn out to be more than an airport. There’s actually been some conjecture that Dubai could well have plans to devote part of this project to space transportation, either as a commercial-satellite launch facility, or as a recovery area for returning reusable space vehicles – making this one of the first commercial spaceports on earth.

Whatever the ultimate plans are, it’s very clear that Dubai is determined to succeed. But many of the Dubai-based companies are private, and not publicly traded, and those that are public have their shares listed on Middle East bourses, and don’t have U.S.-listed American Depository Receipts (ADRs). And though we’d all love to ride along as investors in one of the big sovereign funds that are spreading billions around the planet, that’s not likely either.

But there are two very clear profit plays here, and one – pardon the pun – flyer.

Fly in Formation on an $82 Billion Project

Boeing (BA) is the most-obvious play here, given that it’s one of only two remaining successful jumbo-jet makers on earth (as I reported here a month ago, China just announced plans for a jumbo-jet company of its own, but that’s at least a decade away).

Boeing will reap billions in airliner orders from the Middle East (England’s Farnborough International Airshow – when billions of dollars worth of airliners are often ordered by carriers and leasing firms during flush times – is scheduled for mid-July) over the next several decades. And that market is dwarfed by the massive demand that’s expected to emanate from Asia: China alone is projected to require $340 billion worth of commercial airliners over the next 20 years.

The company’s defense business is sound, and it just won a favorable ruling from the U.S. General Accountability Office on a protest it lodged over the loss of a U.S. Air Force aerial tanker deal worth an initial $35 billion – and with a potential ultimate value of $100 billion.

At yesterday’s close of $68.21, Boeing’s shares are down 37% from their 52-week high of $107.83. The shares are trading at about 12 times current earnings and 17.5 times projected profits, and carry a dividend yield of nearly 2.4%. What’s more, Boeing has been buying back its own shares, which is often a good sign for shareholders.

Emirates CEO Flanagan – and others involved with the Dubai aerospace project – say the dour outlook for airlines is only temporary and will eventually work itself out. When that happens, we believe Boeing’s shares will definitely move higher – if not before.

MGM Mirage (MGM) is the other key play here. We like the shares of this Las Vegas-based casino-resort operator a lot for several reasons. First, the company is actually a high-profit play on China. And for followers of major global trends, that’s a huge plus.

But MGM also has a very strong tie-in with Dubai, because it already has in place a financing deal from the state-run Dubai World. Last summer, when MGM shares were trading in the $80 range, Dubai World said it would invest $5 billion in MGM.

The goal: Help MGM execute its China strategy, which the Vegas gaming firm has been pursuing since the middle 1990s.

And China is far from MGM’s only target market overseas. It’s working with the Mubadala Development Co. in both Dubai and Abu Dhabi on some similar luxury-level [non-gaming] projects. Mubadala is an investment arm of the Abu Dhabi government.

MGM is on the verge of becoming a top global brand in the hospitality sector, and Dubai wants a piece of the action. You can bet that as Dubai develops its airport property, and throttles up its global tourism strategy, MGM will be a key participant, given that Dubai already owns part of the company.

“Dubai is getting in on the ground floor of some very powerful trends,” Money Morning’s Fitz-Gerald said.

U.S. brokerage houses are downgrading the shares because of a big drop-off in traffic in Vegas. But, to borrow a phrase, that’s not where the action is – or, at least, isn’t where the future action is going to be.

At yesterday’s close of $36.60, MGM’s shares are down 64% from their 12-month high.

If you want one highly speculative play — based almost solely on the hope for takeover — make a study of out-of-favor aircraft leaser Genesis Lease Ltd. (ADR: GLS). The Ireland-based firm has seen its shares drop about 64% from its 12-month high as the credit crisis and the airline-industry downturn savaged the sector. But some experts wonder if DAE Capital might not take this opportunity to grow a bit faster by picking up assets at a discount.

“The level of ambition and the money and willingness to support [the airport project] is staggering,” David Stewart, a consultant with AeroStrategy, told journalists.

Source: Three Ways to Profit From the Biggest Airport on Earth