Wayne,
My understanding is limited. Another poster here I know has spent quite a bit of time on them and maybe will post more.
But my style is as much contrarian as it is value now. And SLOT and IGT are very much contrarian, with big price falls, some insider buying at higher prices (IGT at 20, SLOT at 50).
My understanding of the legislation is that it is getting watered down and may not pass. Graham has noted that the market overpunishes pending legislation. As this legislation gets watered down, the stock prices have remained low.
lasvegassun.com
There are risks, the most of significant of which are highlighted in this article, where IGT claims there's no money to be made in just selling slots. And there's a lot of uncertainty in the biz relationship between IGT and the casinos.
lasvegassun.com
SLOT is diversifying, and I like the longer-term trends in its stock price, the growth opportunities given its size, and I don't mind its recent acquisition, which I think fits and already has good cash flow.
SLOT has an underleveraged balance sheet.
My feeling is that IGT and SLOT will survive, and that the smallest players will be hurt even more, as IGT claims.
And if the legislation either doesn't pass or passes in a milder form, well, then the stocks should rebound.
I've targeted the low $30's for SLOT, and the $11-12 for IGT but they're on my "buy real soon" along with MO, LTR, which I like for similar contrary reasons.
Mike |
