Newspaper article St Louis Post-Dispatch (MO)

Jackpot: Casino Stocks Are Hot, While Textiles Come Unraveled

Newspaper article St Louis Post-Dispatch (MO)

Jackpot: Casino Stocks Are Hot, While Textiles Come Unraveled

Article excerpt

Casino operators, the stock market's biggest winners of the third quarter, look like a good bet for the fourth as well, thanks to gaming's popularity as a source of taxes for cash-strapped states, money managers said.

"In these times of tight budgets, more and more states are seeing gaming as a reasonable way to raise tax revenues," said Daniel Miller, manager of the $440-million Putnam New Opportunities Fund.

Similarly, semiconductor issues, the second-biggest gainer this quarter, should do well again in the fourth since that period typically is the year's strongest for sales of computer-related merchandise, fund managers said.

The outlook isn't so bright for textile and apparel makers, the quarter's laggards, fund managers said, though they'd obviously benefit if consumers shed their caution and spend heavily in the coming holiday season.

VF Corp., maker of Wrangler and Lee jeans, illustrates the industry's problems, even its fans admit. It "has been a big disappointment to us, but we continue to like the stock," said David Prickril, who manages about $300 million at Glenmede Trust Co. in Philadelphia. "Blue jeans are very much a staple item, and so much of apparel is fashion, which comes and goes."

A survey of the industry groups that make up Standard & Poor's 500 Index shows that gambling on casino stocks paid off big in the third quarter. The hotel-motel group, which contains casino operators Hilton Hotels Corp. and Promus Cos., returned 34.61 percent to investors, including capital gains and dividends. Marriott Corp., which isn't into gaming, rounds out the group.

The hotel-motel group's return beat the 87 other industry groups tracked by S&P and trounced the 3.1 percent total return of the benchmark S&P 500 index.

That winning performance was largely because of Promus, operator of Harrah's casinos. Promus stock soared 64.5 percent in the third quarter, buoyed by optimism about its properties and its expansion into the hot market for riverboat gambling. …

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