Legendary Investor Betting Big on Scientific Games (SGMS)

Last Updated on Tuesday, 12 June 2012 16:56 Tuesday, 12 June 2012 16:52

Written by Editor

Scientific Games Corporation up 4.90% for Week

Even though Scientific Games Corporation (NASDAQ: SGMS) is in the casino and lottery equipment business, when a legendary investor like Ronald Perelman is buying, the investment can hardly be considered a gamble. The gambling industry is considered to be recession-proof and stocks in various aspects of it like Wynn Resorts (NASDAQ: WYNN) and Carnival Corp (NYSE: CCL) have performed well thanks to profits from games-of-chance.

Ronald Perelman is also a director at Scientific Games Corporation. As an insider, he recently bought 805,000 shares of Scientific Games Corporation at $8.14 each. With the buys from these two transactions, Perelman owns over 32 million shares of Scientific Games Corporation.

Another legendary investor, Peter Lynch, stated that insider buying is always a positive sign. There are many reasons for insiders to sell. But there is only one reason for an insider to buy, according to Lynch, who guided Fidelity Magellan fund to annualized returns of 29.72% from 1977 to 1990. That reason is an expectation by the insider that the share price will continue to rise.

Rising also for Scientific Games Corp are the earnings-per-share. On a quarterly basis, earnings-per-share growth is up by 125.60%. This year, earnings-per-share growth has increased 91.52%. For the next year, earnings-per-share growth is expected to rise another 43.90%. This has resulted in a very healthy price-to-sales ratio of 0.87 for Scientific Games Corp.

Now trading around $8.40 a share, the mean analyst target price for Scientific Games Corp over the next year is $13.10. Institutions own almost 60% of the stock, which is very positive. The "House always Wins" is more than just a saying when buying stocks in the industry such as Wynn Resorts, Carnival Corporation and Scientific Games Corporation. Having an insider like Ronald Perelman buying puts the odds even more on the side of the small cap investor.

http://www.smallcapnetwork.com/Legendary-Investor-Betting-Big-on-Scientific-Games-WYNN-CCL-SGMS/s/via/3420/article/view/p/mid/1/id/995/

Legendary Investor Betting Big on Scientific Games (SGMS)

Scientific Games Corporation up 4.90% for Week

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