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Stock Strategist

Three Casino Stocks to Roll the Dice On

We highlight some of our favorite names within the gaming industry.

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Recent worries over a consumer spending slowdown have knocked some of our favorite casino stocks down to near bargain-basement prices. Though we think that some short-term concern is warranted, we hardly expect the demise of the American gaming industry and would encourage investors to consider the opportunity that the market has presented.

Earlier this month, the Nevada Gaming Control Board reported a 3.5% drop in Nevada gaming revenue for the month of June 2006. Atlantic City revenue saw a similar drop--5% in July. The Nevada numbers represent the first negative monthly growth for the state in two years and have sparked fears of an industrywide slowdown. Certainly, $3 per gallon gasoline, a weakening housing market, and higher interest rates have all taken a chunk out of the average Joe's gambling budget, and we see little over the next few quarters that could ease this pain.

Sumit Desai, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.