Living In a Van Down By the River

Written by GSCR Staff   
Thursday, 19 September 2013 11:06

We’ll keep the SNL theme going for this week with the immortal words of Matt Foley, the loser motivational speaker, played by the late great Chris Farley. I do not know if I have ever laughed harder while watching the show in my life.

The headline is related to today’s theme, a review of our gaming picks in the Market Monitor. It is apropos as betting the ranch at the casino can result in losing it all and the two stocks we have pick previously have both been losers.

What to do now?

Asia Entertainment & Resources Ltd. (NASDAQ – AERL - $3.93)

We highlighted AERL in late March at $4.12, and the stock is down nearly 5% as of the market close yesterday. The Hong Kong based gaming stock has been relatively flat with no real up or down news. The stock is tied to the Chinese economy and consumer discretionary income, which is growing at a relatively slow pace compared to the boom of the 2000’s. The DMA is very bearish in the short and long term looking at the charts. However, the forward earnings and P/E multiple associated with them make AERL very attractive. The Company is set to earn $1.17 per share giving it a forward P/E under 4 for 2014. Analysts clearly believe the Chinese economy will continue to rebound. We say hold on to this one.

PokerTek, Inc. (NASDAQ – PTEK - $1.22)

We wrote this one up in late February, and the stock is down nearly 10% as of the close of the market yesterday. The Company just announced a deal last week with MSC cruises to provide electronic poker table on all cruise lines. The technical analysis is bearish for the 5, 20, and 50 day DMA and future revenues are uncertain. Without deal flow the Company and stock will remain in the doldrums. We say cut your losses on this one.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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