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

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

This from Today’s Financial News:

Revenue for Penn National Gaming Inc. (NASDAQ:PENN) in Q3 slowed, as it did at most casino operations. But due to the termination of an attempted acquisition deal, the company received a settlement of a cool $225 million. In addition, the (intended) acquisition group purchased 12,500 shares of Series B Redeemable Preferred Stock due 2015 for $1.25 billion.

As a result, Penn reported a net income of $147.5 million. That’s $100.9 million more than the same quarter last year!

Currently, Penn operates 19 facilities in 15 jurisdictions. With this influx of cash, the company has declared itself ready to expand.

Waiting for November 4

Thanks to huge budget deficits, the State of Maryland is reconsidering its former stance on slot machines. This election day, my fellow Marylanders are likely to approve a referendum that would open the state for slots.

Penn has indicated interest in contracts to run slots facilities in Maryland. If the referendum to permit the five proposed sites is passed, the company will be ready to move on the bidding process.

Priced around $20, Penn had seen a 52-week high of $62.25. And with a P/E of 6.5, this company holds promise.

I recommend you buys shares of Penn National Gaming Inc. (NASDAQ:PENN) today [Friday] at or under $21. Depending on the outcome of the referendum, you could see short-term gains of 20% within the first weeks of November.

Source: Profit referendum: How this election day could boost Penn National (PENN)

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.

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