Gamblers might win a few hands of poker, but the house always comes out on top. The recession hit the gambling industry hard, but recently, it has shown strong signs of recovery. Traders who would rather not risk their money on a turn of the roulette wheel can still take advantage of the industry’s growing revival.
Use a free online stock screener such as Yahoo Finance or your stock trading account’s stock screener to evaluate casino stocks. Although a few casinos, such as The Riviera, remain independent and privately owned, most are owned by corporations. For example, Caesars Entertainment Corp. owns Bally’s, Caesar’s Palace and the Flamingo while MGM Mirage owns the Luxor, Circus Circus and Excalibur.Step 2
Start by typing the casino’s name in the screener search box and click on the stock symbol when it comes up. Click on “Key Statistics” or somesuch to bring up the company’s financial information. Check to see if the stock price is trading at the high or low, or if the price is trending up or down. Pay attention to the company’s profit history, and compare the current profit to the amount of debt the company carries. Click on “Competitors” to bring up a side-by-side comparison of the casino’s competitors to help find the strongest stocks.Step 3
Visit each company’s website and see if they have lowered their risk by operating casinos in multiple locations. Compare the profit and debt load of the casinos in one location to those in another. Use a stock rating service such as Moody’s or Standard & Poor’s to uncover each company’s credit rating. When finished, analyze all the data and select the company that best meets your investment criteria.Step 4
Go online to your trading account or open one if you have not already done so. At the order entry window, type in the company symbol you want to trade. Select the number of shares you want to purchase, then choose "buy" as the action. If you want your order to be filled immediately, enter the trade as a market order. For a better fill price, enter it as a limit order and choose your price threshold. Wait until the order is confirmed before closing out the order entry page. Check your portfolio to be sure the stock is listed in your account.
- Monitor your trade a couple of times a week and look for any new uptrends or downtrends that might be developing.
- The gambling industry is very volatile. Only invest with money you can afford to lose.
Based in St. Petersburg, Fla., Karen Rogers covers the financial markets for several online publications. She received a bachelor's degree in business administration from the University of South Florida.