In today’s daily we have covered the upcoming Echo Entertainment (Expensive).












2 Industrial Stocks To BUY



 
The S&P 500 was up by 23.40points or 1.17%on Friday to 2018.05 points. The Dow and S&P 500 ended at record highs on Friday and other indexes posted strong gains for a second week after the Bank of Japan's surprise move to ramp up its stimulus program. Major indexes also posted gains for the month of October, putting in a sharp recovery from their recent selloff that almost drove the S&P 500 into correction territory. The benchmark index is now up 8.4 percent from its Oct. 15 low and up 9.2 percent for the year so far.

More stimulus globally could help the outlook for stocks, especially if the U.S. economy keeps improving and earnings keep growing. Worries about the global economy and its impact on U.S. earnings, the spread of Ebola and slumping oil prices were largely behind the market's recent sell off. Among the day's biggest percentage gains, shares of Expedia rose 5.3 percent to $84.97 a day after it reported results. GoPro shares jumped 13 percent to $77.10 after forecasting better-than-expected holiday quarter sales.



Expedia Daily Chart (Source – Thomson Reuters)
S&P ASX 200was up by 50.4points or 0.92%on Friday and closed at 5526.6 points. Australia and New Zealand Banking Group added 0.7 per cent to $33.50 on Friday after reporting a 10 per cent lift in full-year cash earnings to $7.12 billion, buoyed by continuing strength in its domestic mortgage lending business. National Australia Bank kicked off bank reporting season on Thursday, when it showed a 10 per cent fall in cash earnings to $5.18 billion and confirmed it is looking to sell its poorly performing British division.
Crude oil prices slumped more than 11 per cent in October, and oil stocks felt it. Origin Energy lost 4.7 per cent to $14.27, while rivals Woodside Petroleum, Santos, Oil Search and Liquified Natural Gas also sold off. Plasma product manufacturer CSL jumped 8.1 per cent to $80.19 in October after unveiling the acquisition of a Novartis division that will make it the second-largest flu vaccine provider in the world.

ANZ Bank Daily Chart (Source – Thomson Reuters)
 
Top Performers on the ASX 200 were :-


 
Stock of the Day – Echo Entertainment  (Expensive)

We view Echo’s trading update as very positive with the company guiding to first half normalized EBITDA of $245 – 260m, up 23-31% on the prior period. Normalized revenue growth in the 17 weeks to October 27 was +27% with The Star +36% and the Queensland Casinos +8%. VIP turnover growth was 78% and domestic revenue growth was 13%.


Echo Entertainment Casinos (Source - Company Reports)

The company is experiencing good demand at all properties but particularly within electronic gaming segment as the company benefits from its initiatives in relation to customer segmentation, loyalty and customer service. Expenses are tracking to management’s expectations, albeit they are slightly ahead given the higher volumes. The growth at The Star is broadly based however the growth at the Queensland Casinos is more concentrated on electronic gaming.


Revenue Growth (Source - Company Reports)

The company is gaining traction with its loyalty program, enhanced product strategy and marketing. Main tables have disappointed slightly while the Private Gaming Room (PGR) has been very strong, partly aided by a higher win rate. Non-gaming has been reasonable however the gold coast remains soft. VIP turnover has increased significantly as the company has expanded the number of Junket operators.


EGP Daily Chart (Source - Thomson Reuters)

We expect the company will continue to benefit from the revised loyalty program and regulatory concessions in Queensland. The loyalty program is gaining traction however this has predominantly in the upper tiers and there is scope to enhance this further particularly as new management and processes are incorporated. Echo has gained share in slots in each of its key markets. We believe the stock is expensive at the current price and would review the stock again at a later date.
 

 
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