BY Dennis Hobein:

Contributor, Stock Traders Daily

Real Time Trading Reports:  Included are detailed trading reports designed to help investors realize opportunities in these companies.  The reports are linked to the stock symbols in the article below.

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(La Jolla, CA) One of the hardest hit businesses during the recession was the casino and gaming industry. All parts of that industry have been impacted – gaming, occupancy, room rates, convention, and VIP business. A look at some of the largest casino operators’ financial results over the past four quarters demonstrate just how devastating the economic downturn has been for these companies. For example, from 3Q08 to 2Q09, MGM’s (NYSE: MGM) revenue nose-dived, going from a modest drop of 5.7% to a drastic 21.2% fall-off, while also reporting losses in the first two quarters this year. Additionally, following fourth quarter ‘08 results (reported on March 17^th), commentary from MGM’s upper management did little to comfort investors that better days were ahead, commenting, “In Las Vegas, it is unclear when things will turn around. We expect RevPar to be lower in Q1 versus Q4 and expect convention business to be down in 2009.” The poor results and cautious commentary have severely hurt shares of the gaming giant, with the stock down 30% from the beginning of 2009 versus a +13% move for the Diamonds Trust (NYSE: DIA) – an ETF that corresponds to the performance of the Dow Jones Industrial Average. However, there is some compelling evidence that the worst is over for gaming companies such as MGM, Wynn Resorts (Nasdaq: WYNN), and Las Vegas Sands (NYSE: LVS).

WYNN is commonly known as the premier resort destination in Las Vegas for the wealthy, and may also be the best managed hotel, with famous “Sin City” businessman Steve Wynn running the show. It also may be a good barometer for the health of gaming in Las Vegas, because Las Vegas generates a large portion of its business from VIP visitors. After reporting declines on the top-line over the past three quarters, its revenue actually showed a slight uptick in Q3 and easily beat the Street’s EPS consensus estimate on October 27^th. Mr. Wynn wasn’t ready to pop the cork on the champagne just yet, commenting “people are still reluctant about coming to Vegas.” The company also benefitted from stronger performance out of Macau (China), as revenue per available room increased slightly to $235 in the 2009 period versus $234 in 2008. Still, the overall improving results are a positive indicator that this industry is on the rebound.

WYNN peer LVS, which owns The Venetian, The Palazzo Resort, and The Sands Expo Center, was more upbeat after reporting its Q3 earnings on October 29^th. The company bullishly stated that it just completed its best quarter in its history with respect to booking new group room nights in Vegas. More specifically, it said that over the prior three months, it had had more than 300,000 group rooms for next year and 2011, with rates exceeding $200/room. MGM essentially confirmed this trend on its conference call, reporting that booking levels are improving and expected to be even better next year. Casino and gaming revenue remains a soft spot for all Las Vegas gaming companies – down 1% for MGM, negatively impacting LVS’ top line by $40 million – but, if resorts can again bring in the large groups, table and slot revenue should see a boost soon.

Looking at the three aforementioned stocks, the one that seems to have the best near-term upside potential for longs is WYNN. Today, the stock is up about 5% (bolstered by its $4/share special dividend) and has pushed above its 50-day moving average. The stock has some strong momentum behind it, up more than 15% already for November. There are two levels of resistance to be aware of, though: at the $65 and $70 levels. If it can push through that $70 level, there is a good chance WYNN shares move on to make new 52-week highs at $74.50. For a more comprehensive trading strategy on WYNN, we suggest first reading our free trading report on that stock.