| BUSINESSWEEK ONLINE : OCTOBER 18, 1999 ISSUE | ||||||||
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| BUSINESSWEEK INVESTOR -- INSIDE WALL STREET
Why Boyd Gaming May Be a Good Bet Investment pro Steve Kroll is not a gambling man, but he is keen on casino stocks these days. He's betting that Big Board-listed Boyd Gaming (BYD), currently at 6 a share, will soon catch fire like many other gambling stocks have. ''It is a play on the millennium traffic [at New Year's] and a takeover bet as well, '' he says. ''Boyd is the cheapest and the best valuation story in the casino group,'' argues Kroll, a money manager at New York investment firm Monness Crespi & Hardt. Other casino stocks that Kroll had picked earlier this year have run up, including Park Place Entertainment (PPE), which leaped from 7 in April to 13, and Station Casinos (STN), which has zoomed from 13 to 25. Kroll believes that Boyd, which owns 12 casinos located in Illinois, Louisiana, Mississippi, and Nevada, is worth at least 20, based on its earnings growth and the lofty price-earnings ratios of its peers. Boyd currently sells at six times Kroll's estimated 2000 earnings of $1 a share, up from an estimated 65 cents this year. Kroll notes that Boyd will open a resort in Atlantic City through a ''sweetheart deal'' that it has struck with Mirage Resorts (MIR), arranged by the latter's chairman and CEO, Steve Wynn. In Atlantic City, Boyd and Mirage are co-developing a resort called the Borgata, a $750 million entertainment facility with 1,200 guest rooms. It will adjoin Mirage's own planned resort complex. The Borgata is scheduled to open in 2002. With the consolidation going on in gambling, Kroll thinks Boyd could become an attractive takeover. Right now, it looks as if ''Mirage and Boyd are on very friendly terms,'' says Kroll. BY GENE G. MARCIAL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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