Monday, October 4, 2010

3 Reasons to Buy Melco Crown Entertainment Today

By Dave Mock

Historically, tumultuous times offer some of the best opportunities to buy stocks, and the market's recent mess surely qualifies. And though Chinese casino operator Melco Crown Entertainment (Nasdaq: MPEL) is still struggling to recover from the recession, many investors expect better times ahead.

In our Motley Fool CAPS community, about 96% of the 1,293 investors rating the company are bullish, so there's no shortage of reasons why Melco Crown Entertainment will thrive, three of which I've highlighted below.

But here at The Motley Fool, we're all for looking at both the good and bad sides of an investment. Once you're done with this article, you can read the case against the stock, weigh in with your own comments below, or rate Melco Crown Entertainment yourself in CAPS.

1. Macau pure play
Many CAPS members think Melco Crown Entertainment is the best way to capture growth potential in the hot gaming destination of Macau. With China's growing middle class potentially bringing more business to Macau and with Melco seeing things taking shape at its massive new City of Dreams casino, some investors believe the company is sitting in a unique position to tap into a big, growing gaming business in the region.

2. Macau the new Las Vegas
Bally Technologies (NYSE: BYI) is seeing sluggish gaming equipment sales, and a weak Las Vegas market is still pressuring casino operators like Boyd Gaming (NYSE: BYD), who recently reported shrinking margins. While other U.S. focused companies like Penn National Gaming (Nasdaq: PENN) are slowly seeing improvement, Macau has seen strong growth this year. After posting record revenue figures in May, the Chinese gambling center recorded a 40% jump in August revenue compared with last year, and many CAPS members like Melco's advantaged position in the market.

3. Moving up the ranks
While MGM Resorts' (NYSE: MGM) MGM Macau holds the smallest market share of the six casino license holder in Macau, Melco Crown gained enough market share in July to edge out Wynn Resorts' (Nasdaq: WYNN) Wynn Macau and move up to the No. 3 spot behind Las Vegas Sands' (NYSE: LVS) Sands China and SJM Holdings. Investors like Melco's improving mindshare with big gamers.

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