Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.
International Game Technology (NYSE: IGT) is a favorite speculative pick for 2007 from Dan Sullivan, editor of The Chartist. The advisor, who specializes in relative strength, notes, "IGT is a leading designer and maker of microprocessor-based gaming devices, including video poker machines and video and reel-spinning slot machines.
"Due to its market share, financial strength, and innovative game designs, IGT is well-positioned to benefit from industry growth both in the U.S. and abroad. Many states have -- or are considering -- legalizing or expanding gaming as a way to generate tax revenue. Currently, casino gambling is legal in 20 states. And increasingly slot machines are being introduced to race tracks across the country.
"Also, many of the old-style machines, which are not chip-based, are candidates for replacement as casinos strive to provide the newest and hottest games for their gamblers. Both areas should be a strong revenue source for IGT over the next several years.
"Revenues come primarily from the sale of gaming machines, systems, parts, conversion kits, licenses and royalties, equipment, and services. Gaming operations, which consist of proprietary gaming products, services, and intellectual properties, constitute the other half of the business.
"One of the innovative ideas that IGT recently introduced is the concept of multiple-player slot machines that allow players to play the same game and share in the winnings. The trend began in 2005 with IGT's popular Wheel of Fortune, adapted to the new technology. IGT also offers an Indiana Jones multi-player game.
"The new concept has proven very popular with players and is expected to be the next big thing in slot machines. The combination of a positive industry outlook and IGT's leading technology and innovation give it a strong competitive edge over its rivals.
"Meanwhile, I am especially encouraged by IGT's technical picture. After a consolidation phase between April and November 2005, which resulted in a double-bottom, the shares have exhibited a strong bullish chart pattern. In the process, IGT has traded comfortably above its up-trending 50- and 200-day moving averages."
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