Las Vegas Sands Corp. (LVS), MGM Resorts International (MGM), Melco Crown Entertainment Ltd (ADR) (MPEL): 3 Large Casinos to Watch in 2013

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The asian growth giant

Since Chinese casino operations are stronger than those in the United States, it would follow that Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), which operates solely in Macau, could be a winner. Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) is incorporated in the Caymen Islands, and registered as an overseas company in Hong Kong. It has rebounded strongly from the recession, and revenue has increased by 51% on average over the past 5 years.  Its earnings, which turned positive in 2010, grew to $1.24 per share last year.

What benefits Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) and others operating in Macao is policies of the Chinese government in terms of boat and rail travel. Melco’s “City of Dreams” drew $2.9 billion in revenues in 2012. Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) is working to diversify with its operation in the Philippines, where it plans to construct a $1 billion facility in Manila Bay.

Earnings are poised to advance in the 25% range for the next several years. So, what’s the problem? How about a price to earnings ratio of 37, brought on by a 113% increase in the stock price over the past year. Due to valuation, many are tempted to wait for a price pullback.  With the way Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) has been performing, many may be waiting a long time.

Foolish final word

The casino business is benefiting from growing wealth, accessibility, and awareness. Of the 3 large casino operators, only those with significant Asian exposure are solid investments.  Therefore, you should avoid MGM Resorts International (NYSE:MGM) and look closer at Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) and Las Vegas Sands.  An investment in either is a solid bet.

The article 3 Large Casinos to Watch in 2013 originally appeared on Fool.com.

Bill Edson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Bill is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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