Ameristar Casinos (ASCA) with lots of upside potential

Discussion in 'Stocks' started by outoftheplane, Jun 12, 2008.

  1. [size=4pt]Ameristar Casinos Inc. (ASCA)[/size]

    [size=1pt]Profile: Ameristar Casinos, Inc. engages in the development, ownership, and operation of casino entertainment facilities in the United States. It also offers slots, food, lodging, entertainment, and other services. The company primarily provides slot machine plays; and table games, including blackjack, craps, roulette, and poker. Its signature restaurant concepts include steakhouses, elaborate buffets, and casual dining restaurants with sports bars featuring the audio-visual technology. As of December 31, 2007, the company operated eight properties in Missouri, Iowa, Mississippi, Colorado, Nevada, and Indiana. Its portfolio of casinos consists of Ameristar St. Charles in the St. Louis metropolitan area, Missouri; Ameristar Kansas City near the Kansas City, Missouri; Ameristar Council Bluffs at the bank of the Missouri River, Iowa; Resorts East Chicago near Chicago, Illinois; Ameristar Vicksburg in Vicksburg, Mississippi; Ameristar Black Hawk near Denver, Colorado; Cactus Petes Resort Casino and The Horseshu Hotel & Casino in Jackpot, Nevada; and Resorts East Chicago in East Chicago, Indiana. Ameristar Casinos was founded in 1954 and is based in Las Vegas, Nevada.
    Sector: Services / Resorts & Casinos (Gamming)
    Market Cap: 1.01$B

    Technical Analysis:

    After a long downtrend, ASCA is performing a rebound and breaking out its 50-EMA and descending resistance:


    This kind of technical layout may set a tone for further upside movement, in this case the first resistance level should be near its 200-EMA at $22, further resistance levels near $27.
    Current support level: near $17, making this spot easy for entry setups with low downside risk.

    Fundamental Analysis:

    A series of downgrades were made during the last months, and even so, the current market estimates consensus is something like a 2008FY EPS of $1.21 and 2009FY EPS of $1.37… so ASCA is trading at 14X multiple inside a sector that trades at plus 22X multiple.
    The company has a strong balance sheet and a clean fundamental history… Upcoming results for the next quarters may be surprising and may set a new tone for new updated research notes.

    And here is zip file with several recent research notes (today and yesterday notes):


    Price targets range from $22 to $27.50, most analysts believe the stock is undervalued, trading at just 14 times 2009FY earnings while the sector trades above 20’s. Upgrades are just starting ;)

    Most of their income comes from Missouri, Casino revenues are mostly made by locals, not depending so much on (national) tourism like regular Las Vegas Casinos. This company looks too solid to keep trading at these prices.


    Taking into consideration Technical and Fundamental Analysis, I consider ASCA as a very good play inside this sector, with plenty of upside potential and reduced risk at current prices.

    Good trading !