Sin stocks
Casino stocks have been beating hard by fear of recession but it might just be time to get in heavy. Sin stocks are companies that benefit from gambling, smoking, drinking or whatever else might be on society’s black list. I’m starting to like the prospects of one sin stock in particular, Boyd Gaming.
The gambling sector as a whole has lost quite a bit of value due to recession fears and worries that people might not spend as much on entertainment as in year’s past. I like to think that this presents a bottom in sin stocks like Boyd Gambling. For the long term investor, Las Vegas is looking to fare very well.
Warnings have been everywhere about a possible downturn in casino gambling. This is expected for the short term, but I do not think it hinders much in the way of Boyd Gaming’s long term prospects. I’m convinced that gambling will always do well, especially in places like Las Vegas where it is the main attraction of the city.
Boyd Gaming has been hit hard since last summer, losing over 50% of its value. This stock, based on income and future income is entirely too oversold. The move through the $33.50 support level didn’t help the stock much either, leading it to lose $9 in just a few days.
I think the market may have over reacted on this particular stock and now its time to get in heavy. Earnings will be announced February 27th which will give us an indication of how bad the gaming industry is really doing. Based on old data, pre-recession you might say, Boyd trades at just 6.3 times next years projected earnings and a PEG ratio of .6. The company was expecting some serious growth figures, February 27th should clear it all up for us. If the report comes out with a small drop in revenue, Boyd is still a buy, the company is just too oversold at this point.
