Casino properties have been hurt the worst, with names like Las Vegas Sands and MGM producing catastrophic returns for investors who bought at their peaks. Makers of gaming systems and accessories have not done much better, but they've generally lost less than the casino operators. Since the market bottomed out last Nov. 20, however, several of the gaming stocks have regained on value bringing some reward to shrewd stock punters.

One stock that's up nicely from its nadir is Reno based International Game Technology – IGT, leading computerized gaming equipment and systems manufacturer, which also has products in casino management services and special equipment for government and tribal casinos. At yesterday’s close, IGT stock gained about 70% from its US$7.03 Nov. 21 low. As a company with decent fundamentals, and the prospects for a modest recovery in business, analysts believe that buyers at current prices near the US$12 mark could cash out in a few months with a nice little earner.

Like most of the gaming industry, business results have been in the dumps, and IGT reported revenues down at 4.6% from a year before in September with profits also down at 57%. The company earned US$342 million on sales of US$2.5 billion in the past 12 months. Analysts, who expect IGT to earn US$1.21 per in the year ending September 2009), giving the stock a price-earnings ratio of 10, are looking for annualized growth of about 11% for the next five years, and suggest that the stock is priced cheaply for its expected growth, with a 0.90 price-earnings growth (PEG) ratio.

IGT has been seeing some orders come in from several U.S. states and tribal jurisdictions where gaming is just getting going. Earlier this year, Florida and California voters approved more than 20,000 machines, and just last month in Maryland voters approved up to 15,000 gaming machines at five locations. Added to this, sales in Latin American markets should also bring good cheer to the IGT stock, especially in Mexico, which should see hundreds of new properties in the next five years, and where the gaming industry giant has an impressive foothold. (S-12.18.08)

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