MENU

2 good reasons why Crown Resorts Ltd could be a smart play in the entertainment and leisure industry

Integrated resorts and casino operator Crown Resorts Ltd (ASX: CWN) could be a long-term grower for those seeking exposure to industries that will benefit from more consumer spending.

Domestic consumer spending growth may be constrained by the effects of the mining pullback, as well as the jobs and work to be lost from automakers planning to stop manufacturing in Australia. As consumer confidence slowly builds up, companies having overseas exposure as well could make up for that delay.

Here is why I believe Crown Resorts could have stable growth abroad and consolidate its market presence here in Australia.

1-    It is expanding the number of cities which it will have casinos in. Up until now, the Sydney and Brisbane markets have been closed to it because the state governments weren’t issuing new gambling venue licences.

Now, there is an opportunity to get at least two more. NSW will now allow Crown to develop a VIP gambling venue within the Barangaroo South building development in conjunction with a six-star hotel and shopping venues.

Also, it is applying for at least one of three new casino licences being proposed by the Queensland government. Up until now, Echo Entertainment Group Ltd (ASX: EGP) had exclusive gambling business in both Sydney and Brisbane, but that could change over the next several years.

2-    Overseas markets like Macau, the Las Vegas of Asia, have opened up for Crown Resorts at a time when Chinese tourism is flourishing and more major cities in Asia want to attract tourists and high rollers to their shores.

Already the company has several venues in Macau through its Melco Crown joint venture and will open another soon this year in Manila. Proposed expansions in South Korea, Sri Lanka, Japan and Vietnam are also possible as those countries relax gambling legislation.

Casinos can be expensive to develop, but once complete can experience healthy earnings margins. If major tourist destinations are opening to this entertainment and leisure industry, Crown Resorts has the best chance to capitalise on it amongst the Australian casino companies.

Another way to add growth to your portfolio is to find out more about what Top Motley Fool analysts just identified as their #1 ASX pick for 2014. This small-cap stock could be poised for big gains (and offers a fat, fully franked dividend!). Discover all the details now, including the name and code, in this FREE investment report, "The Motley Fool's Top Stock for 2014."

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.