salesforce.com, inc. (CRM), Caterpillar Inc. (CAT), Bally Technologies Inc. (BYI): A Report on Shorts

We’re certainly seeing cautious outlooks for both companies, but with the share price of both having reflected that uncertainty, I feel now could be the time to look for an entry point; and not as a short-sale!

The smartest way to play online gaming
Bringing in $36 billion in revenue, the online gaming industry is certainly the talk of the town, with Bally Technologies Inc. (NYSE:BYI) and International Game Technology (NYSE:IGT) being the first two companies to be awarded online gaming licenses in the U.S. last year. Let me make it clear that this doesn’t clear the way for the legalization of online gaming in the U.S., but it’s certainly a nice first step in the process.

Short-sellers aren’t sold on Bally Technologies Inc. (NYSE:BYI)’s success, though. With many hurdles left to leap, online gaming will remain just a pipe dream domestically and Bally’s will remain reliant on the gaming replacement cycle of casinos in order to beef up its bottom line. I, however, think Bally Technologies Inc. (NYSE:BYI)’s and International Game Technology (NYSE:IGT) are the two smartest ways you could possibly play an online gaming legalization in the U.S.

If you think about it, trying to select which domestic casinos would benefit the most is like picking a needle out of a haystack. Some, like Sheldon Adelson, CEO of Las Vegas Sands Corp. (NYSE:LVS), have made it very clear that they aren’t interested in potential online gaming revenue. Many others, however, have positioned themselves to take advantage of Americans’ insatiable urge to gamble if and when online gaming is approved.

That’s where Bally Technologies Inc. (NYSE:BYI)’s and IGT come in. As pure software and programming plays, they’ll get the business of practically every casino because… ding, ding, ding — you got it… they have the licenses! Even if online gaming is still five years away, these two make for an intriguing cash flow play as new and old casinos are buying and/or replacing old machines constantly.

In short (no pun intended), this isn’t a stock I’d bet against.

Foolish roundup
This week it’s all about asking yourself, “Does this make sense?” In the case of Caterpillar and Bally Technologies Inc. (NYSE:BYI), a trend toward overseas industrialization and the legalization of online gaming seems inevitable, so both companies appear fairly valued, if not undervalued. As for Salesforce, with its growth rate slowing and the company needing to spend vigorously on its own expansion, I’d probably keep to the sidelines and let the short-sellers have their way over the interim.

What’s your take on these three stocks? Do short-sellers have these stocks pegged, or are they blowing smoke? Share your thoughts in the comments section below.

The article Shorts Are Piling Into These Stocks. Should You Be Worried? originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool recommends Salesforce.com.

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