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10 stocks better than a lottery ticket - 4th April 2012
If you happen to be one of the lucky few who’ve had million dollar lottery payouts, by all means skip the rest of this article.
But for the rest of us losers, which sadly includes me, its time to get real about coming up with a plan for financial security that doesn’t involve a million-to-1 long shot.
On second thoughts, judging by the riches to rags stories you hear about some lottery winners, maybe they should keep reading too!
Looking for the easy way out
I’ve got nothing against throwing away a dollar or two for the chance at winning millions. After all, it’s not every day that you get a chance at a seven figure payday — and just the entertainment value alone of pondering the impact that a multi-million jackpot could have is worth something.
But for some players, there’s clearly more going on than simple entertainment. Stories about people buying hundreds or even thousands of dollars’ worth of lottery tickets are everywhere. And while some of those big spenders can afford to part with the cash, others appear to be making their wagers as their only hope of ever being financially secure.
That phenomenon is a symptom of the failure of some Australians to become financially adept. Most successful investing doesn’t involve quick payoffs or big gambles but rather slow and steady gains that eventually add up to substantial wealth. That may not be very exciting, but your odds of success are a whole lot better than with picking some numbers out of a big hat.
Investing is not gambling
In addition, on the surface, investing may seem like just another version of gambling. Some stocks make people rich, while others lose all their value and leave their shareholders penniless.
But the vital difference is that investing outcomes aren’t random. By looking closely at businesses and their prospects, you can form educated opinions about their future performance. You won’t always be right — but it won’t simply be a shot in the dark.
Perhaps more important than that, with the lottery, there’s only room for one winning set of numbers. Shareholders don’t have to worry about only one stock being a winner.
Invest in the gambling companies
Instead of gambling away your money, why not take a punt on some of the companies that operate in our gambling industries? After all, it’s a healthy industry and we know our fellow Aussies love a punt.
Poker machines
First up, two of the giants of the ASX. Woolworths Limited (ASX: WOW) and Wesfarmers Limited (ASX: WES), both with market caps over $30Bn, each own thousands of poker machines through the hotels they own. Woolworths actually owns more poker machines than five of the top casinos in Las Vegas, and makes $874m per year from its pokies.
Aristocrat Leisure Limited (ASX: ALL) and Ainsworth Game Technologies Limited (ASX: AGI) both make the poker machine cabinets, the software that runs on them, as well as software to network them together and administer the poker machines. I’ve written about both Aristocrat and Ainsworth recently.
Casinos
If you want to invest in the companies that run casinos, first stop is Crown Limited (ASX: CWN). The company owns casinos in Melbourne and Perth, as well as a one-third shareholding in Melco Crown Entertainment Ltd (NASDAQ: MPEL), which owns casinos in Macau. Crown also owns the Aspinalls Club in London and interests in online betting exchange Betfair Australasia and casino operators US-based Cannery Casino Resorts and UK operator Aspers Holdings.
Echo Entertainment Limited (ASX: EGP) owns and operates casinos in Sydney, Brisbane and the Gold Coast, and you may have seen its Star attraction (pun intended!) in the media recently. Crown owns over 9% in Echo, and it’s my top tip for a 2012 takeover (tongue-twister not intended).
Another smaller company is Reef Casino Trust (ASX: RCT) which is an Australian property trust (or A-REIT) – with just one property – the Reef Casino in Cairns. It doesn’t actually own the casino, but charges rent to the casino as well as the restaurants and the hotel all located on the property.
The company is profitable, earning $5.8m in 2011 on revenues of $22m, a rise of 52% over 2010, and expects to at least maintain its profitability in 2012. Trading on a P/E of just 9 and a trailing dividend yield of 6.7%, it could be an interesting punt.
Lotteries, sports wagering, horse racing
The big two companies in this space are Tabcorp Holdings Limited (ASX: TAH) and Tatts Group Limited (ASX: TTS). My colleague Scott Phillips outlined his views of these two companies in this article, late last year.
Both companies operate poker machines, horse racing and sports wagering around Australia. Tatts Group also has Lottery licences in Victoria, NSW and Queensland, while Tatts Group runs Keno in licenced venues in NSW, Queensland and Victoria (the latter in conjunction with Tabcorp).
Jumbo Interactive Limited (ASX: JMB) is another small company operating in the lotteries sector. Jumbo sells lottery tickets and developed OZLotteries.com. The company is expanding into the US and the UK and European markets, which are huge markets compared to Australia. Currently trading on a P/E of 8, it looks cheap and definitely worthy of further research.
The Foolish bottom line
While some of these companies may or may not be worthwhile investing in at the moment, my main point is that if you’re counting on the lottery, pokies or gambling to help rescue your finances, there’s a better way. Rather than gambling with a lottery ticket, betting on a hot race tip or playing the pokies, think about the companies that would be taking your money, reverse the situation, and make them work for you.
If you’re looking for more ASX investing ideas, look no further than “The Motley Fool’s Top Stock for 2012.” In this free report, Investment Analyst Dean Morel names his top pick for 2012…and beyond. Click here now to find out the name of this small but growing telecommunications company. But hurry – the report is free for only a limited period of time. (Credit: The Motley Fool)
Five Reasons Lionsgate Is The Company I Want To Invest In...
Let me warn you upfront, I’m not a stock analyst and this is not investment advice. I’m just a blogger who writes about movies and comic books, so I’m obviously the last guy you want to ask about where your money should go. But I’m just saying, for me personally, Lionsgate is a film studio that’s set for some big growth in the next few years, and I wish I had a big bag of money to invest.
Why, you ask? I’ll give you five very good reasons why I want to invest in Lionsgate…
The Hunger Games series– As you’ve probably heard, read, and/or seen by now, there’s a new blockbuster franchise on the block, and in the last ten days it’s already made $362 million. It’s headed easily north of $500 million and probably above $700 million, plus another nine-figure haul on DVD and Blu-ray, not to mention merchandising. The sequel, entitled Catching Fire, is already scheduled for a November 2013 release, and will likely build on the mega-success of the first film. There’s also talk of turning the third and final book in the series into not one but two films. Translation: Lionsgate has a hot property on its hands that’s indeed caught fire and will burn brightly for the next many years.
Ender’s Game adaptations — That’s right, yet another franchise from the young adult fiction genre is gearing up to hit the big screen. And once again, Lionsgate is at the helm. This one, a sci-fi tale of a future in which kids and young adults are trained by the military for an imminent alien invasion, already has a massive fanbase and will probably be another mega-hit film franchise, at least to the tune of the $500+ million box office range if not more. Like The Hunger Games, this series appeals to male and female audiences, and brings in families and viewers of all ages. So that’s the second big property from the young adult fiction genre owned by Lionsgate, and that genre is (as I’ve written previously) one of the two dominant genres in cinema now. Keep count, because we aren’t done with this genre yet…
The purchase of Summit Entertainment — Lionsgate bought Summit Entertainment, which means Lionsgate now owns all of the properties owned by Summit. Those properties include The Twilight Saga and the Step Up To The Streets franchise. Maybe you’ve heard of them? The first is, of course, the third example of a successful young adult fiction property owned by Lionsgate, and has its final installment releasing this November, probably raking in north of $750 million at the box office before storming the DVD/Blu-ray charts afterward. Consider, too, that the fun for Lionsgate doesn’t just involve the final film in the series, because they own all of the films as well now and will be counting those piles of cash that continue to flow into the coffers from previous installments. Meanwhile, you’re wondering what the big deal is about the Step Up franchise, right? Well, the previous three films combined cost only around $60 million to make, and brought home $424 million at the box office, plus DVD and Blu-ray sales and rentals that probably pushed the total to more than $500 million. Half a billion bucks off a $60 million investment isn’t too shabby, and each film has made more money than the last one. With the fourth film releasing this July, and the take from previous installments now going to Lionsgate, it’s a nice low-budget property that’s provided big returns and seems capable of churning out sequels indefinitely.
The Expendables series — The first film in Sylvester Stallone’s series was a hit, and the sequel has upped the ante with the inclusion of widely popular action stars like Arnold Schwarzenegger and Chuck Norris. So expect this one to top the box office of the previous entry, somewhere north of $300 million at theaters before a nice additional run on the home theater market where profit margins are enormous. The films are popular because they are a throwback to the golden age of modern action films, and they answer the question, “What if everybody who ever kicked butt got together to kick each other’s butts all at once?” The answer, of course, is $$$. Lionsgate also has some other big action films set to roll out this year and in 2013, including Last Stand, staring Schwarzenegger. Also in 2013 and part of Lionsgate’s properties via Summit Entertainment, Stallone and Schwarzenegger will team up on screen once again, for the prison escape action movie The Tomb.
Low-budget horror investments — If you keep up with cinema at all, you’re probably aware that the last decade has seen increased profitability for low-budget horror movies. “Found footage” movies in particular have been all the rage and continue to enjoy high popularity, so it makes sense for studios to invest in multiple very-low-budget horror flicks. Lionsgate has been doing so for some time now, including the lucrative Saw franchise and remakes of older horror franchises. The trend will continue in coming years, including this year’s release of Cabin in the Woods and The Possession, plus next year’s The Texas Chainsaw Massacre 3D, and a rebooting of the Leprechaun franchise. This means that, besides all of their big blockbusters, Lionsgate will be profiting from the consistent golden goose of low-budget horror as well.
To summarize: From The Hunger Games this year, Lionsgate will probably make more from that one film than they made from all of their films last year combined. Think about that for a moment. Then remember the final Twilight film also releases this year, as well as the next Step Up and The Expendables 2. Next year brings another Hunger Games entry, the start of Ender’s Game, Last Stand, The Tomb, and the rebooting of the popular low-budget cult horror franchise The Leprechaun. We can expect to see Lionsgate becoming one of the dominant studios over the course of the next couple of years (they’re already the most successful independent film and TV distribution company in the U.S.), and they’ll keep expanding and adding new properties to their stable of material, for ever-growing profits.
And that, dear readers, is why I want to invest in Lionsgate, especially while their stock is still at just under $15 a share.
But as I said, I’m just a writer, not a stock expert. Do you have an alternate opinion? Or do you have some additional positive information I didn’t mention that’s worth sharing? Sound off in the comments below! (Credit: Forbes)
Casino Stocks Are Still Trading Like Chinese ADR’s - 4th April 2012...
This afternoon, all of the leading casino stocks are trading lower with the major stock market indexes. The leading casino stocks are still generating good revenue from the Macao market. Many traders are waiting to see if the casino stocks will start trading like a U.S. stock instead of trading like a Chinese ADR. A fair case can be made that the daily chart of Wynn Resorts Ltd (NASDAQ:WYNN) looks very similar to the chart of Baidu Inc (NASDAQ:BIDU). Both stock made a short term high around late March 2012 and have been pulling back since that time. Recently, Chinese economic data has pointed to a modest slowdown. Obviously, at some point in the future the Chinese central bank (People’s Bank of China) will try and stimulate the economy again. Until that time, traders should trade the casino stocks just the same way you would trade the Chinese ADR’s.
Some leading casino stocks that are pulling back today include Las Vegas Sands Corp (NYSE:LVS), MGM Resorts International (NYSE:MGM), and Monarch Casino & Resort Inc (NASDAQ:MCRI). All of these stocks will generally follow WYNN stock which still remains the leading stock in the casino sector (Credit: Wall St Pit)
Fox-Nine bid doesn't have rights deal in bag - 3rd April 2012...
ARL COMMISSION officials are not surprised Channel Nine and Fox Sports have entered into a consortium that is expected to offer more than $1 billion to retain the free-to-air and pay-TV broadcast rights.
However, it is understood no decision will be made until the ARLC has an opportunity to consider formal bids from rival broadcasters beyond this month.
Nine and Fox Sports, which is owned by News Ltd and Consolidated Media Holdings, whose biggest shareholders are James Packer's Consolidated Press Holdings (45 per cent) and Kerry Stokes's Seven Network Ltd (22 per cent), hold the first and last rights of refusal on the broadcast rights and began a three-month exclusive negotiating period on February 1.
It is thought the consortium hopes to finalise a deal before May 1 that is likely to involve Fox Sports being able to show all games live on pay-TV and Nine broadcasting up to four free-to-air matches per week. Both may also televise State of Origin and Test matches.
However, the ARLC is believed to be prepared to offer representative matches, as well as games on Friday nights, Saturday nights, Sunday afternoons, Sunday nights and Monday nights to different bidders.
ARLC chief executive David Gallop said yesterday officials were keen to look at any option that generated more money for the game. ''We are in an exclusive negotiating period with the incumbent rights holders and the fact that they have come together to look at our rights is not particularly surprising,'' he said.
"We are continuing to look at the opportunities to maximise the value for our product. While there is curiosity about how that is going, it is difficult to make comment about the details along the way." (Fairfax Media)
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