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Navellier Gambles on Boyd
03/18/2005 12:00 am EST
"Although the general stock market is becoming increasingly selective, this is a great environment for our stocks," says Louis Navellier, whose Emerging Growth is the top-performing newsletter for the past 20 years. Here, he gambles on a gambling firm.
"I'm absolutely ecstatic about the stocks on our Buy List. Not only are they exhibiting incredible sales growth (over 60%) and earnings growth (over 330%), but they're also trading at less than 14.6 times this year's estimated earnings. I believe that 2005 is shaping up to be a great year. I strongly recommend that you don't get distracted by the overall stock market and instead adopt the attitude that your best defense is a strong offense of fundamentally superior stocks.
"Boyd Gaming (BYD NYSE) is a new addition to our buy list. Boyd is one of the best-managed casino companies around. In addition to its Borgata casino, the company also operates the Stardust Resort and Casino on the Las Vegas Strip as well as 11 other properties including three locations in downtown Las Vegas, three other properties in the Las Vegas area, and five additional casino operations in Indiana, Illinois, Louisiana, and Mississippi. Boyd Gaming is a specialist in operating casinos that cater to local residents, a market which tends to be very profitable due to a lack of competition.
"The company just reported record earnings. Boyd announced that its fourth-quarter earnings surged due to improving business in Las Vegas and at its Borgata casino in Atlantic City. The company reported that its net income rose over 236% to 45 cents a share compared with 19 cents a share last year. Excluding some accounting adjustments, Boyd Gaming's adjusted operating earnings were 50 cents a share, which were over 35% higher than analysts' expectations of 37 cents a share. The company's sales rose 75% to $540 million.
"Boyd cited rising profits at Borgata (jointly owned with MGM Mirage) as well as new revenue from the recently acquired Coast Casinos chain, which caters to Las Vegas residents, for its earnings. I'd note that the Borgata was in the news recently when it warned its cocktail waitresses and bartenders that they could be suspended if their body weight rose 7%. In the casino business, any news is usually deemed to be good news, so I do not expect that the recent press will hinder future business at Borgata. Meanwhile, I especially like how the company is still heavily owned by its founders. Chairman and CEO William S. Boyd and his family own 46% of the stock. The stock is a great buy. We recommend purchase at prices below $55."
Editor's Note: Pardon the promotion, but Louis' recommendation for a gaming stock is a perfect segue to remind our readers of the upcoming Las Vegas Money Show on May 9-12, 2005, where you can meet face to face with Louis Navellier and dozens of other advisors that are featured in the Money Show Digest.
As always, registration is FREE. Also, if you do plan on attending, please register through the link that appears in the left hand column of the Digest. It is only through your registrations via the Digest that we can monitor the effectiveness of this publication, which allows me to provide this e-letter to you for free.
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