The value of gaming stocks soared in November, outpacing the Standard & Poor's 500 Index 3-to-1 and setting a string of records for the month and the year-to-date.
Driven by solid earnings and prospects for gaming proliferation, casino stocks continued to climb in November with the Applied Analysis Gaming Index of local gaming stocks up 10.4 points, or 5.4 percent, for the month, double its rate of increase in October.
Applied Analysis' monthly weighted average of eight local stocks rose to 204.75 in November, up from 194.35 in October and 159.28 in November a year earlier.
Similarly, the Dow Jones casino index closed Friday at 355.85, up 8.25 for the month and nearly 50 percent year-to-date. That solidly beat the increase in the index every year since 1998, the first year for which comparable data were available.
Investors are betting the economic recovery will continue, which is boosting operator stocks, and that gaming proliferation will continue and pick up steam, accelerating the appreciation of manufacturers' stocks, Deutsche Bank analyst Marc Falcone said.
In general, third-quarter earnings were much more in line with expectations than the first half had been and the outlook for December and 2004 continue to be favorable, he said.
Reno-based International Game Technology continued to be a primary reason for the rapid appreciation in the index of local gaming stocks, Applied Analysis spokesman Brian Gordon said.
IGT closed the month at $34.69, or a monthly average price of $33.23, representing an increase of nearly 10 percent, he said.
"Expectations for gaming expansions in new jurisdictions and the current trend of converting casino floors to coinless machines continues to drive demand for the company's equipment and their stock price," Gordon said.
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