Even though the current economic problems are hurting Vegas probably more than any other place in the US, I think that Boyd Gaming is a strong candidate to be on top of things once the situation improves even slightly. Here's why:
First, they have a good mix of properties, both on a National level as on a local Vegas level. They have properties Downtown, off-strip and a mege project under construction (which is a key aspect) on the Strip (where The Stardust used to be). The fact that construction is ongoing in the current economy means that once things get better (and inevitably things will improve), the renovation will either be done or well underway. Compared to all the big projects in Vegas that were either cancelled or put on hold, this will give Boyd Gaming an edge, I believe.
Furthermore, Vegas will continue to attract tourists, even in the current economic downturn. Probably these tourists will opt for cheaper lodging options though, which again is Boyd's strongsuit, with the Orleans, two Coast properties and a few downtown options.
Finally, on a financial level, they still look pretty decent to me, compared to others in the same industry. Their P/E and Forward P/E are okay (14.7 and 6.4 respectively) and their negative free cash flow is not at all bad for a company in the middle of building a $4.8bn resort. Probably a stock for the longer term (3-5 yrs), but definitely one that in my view will be worth the wait.
$8.35 (07/16/08)
