If you're looking for companies with strong cashflows and long-term growth potential, it's hard to look past Australia's listed casino operators. While there are three listed on the S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) it is SkyCity Entertainment (ASX: SKC) and Crown Resorts Limited (ASX: CWN) that stand out for their strong competitive positions and aggressive growth strategies.
James Packer controlled Crown Resorts has a rich history in particular. It's Australia's premier gaming empire and heading into 2014 the outlook is bright. Here are three reasons to buy Crown Resorts in 2014.
1. International scale
With a market capitalisation of over $12 billion, Crown Resorts operates on a global scale, with the power and brand recognition to develop new markets as opportunities arise.
The company has exposure in the U.K, Australia and Macau, and in December received approval to construct a $400 million complex in Colombo, Sri Lanka. The complex will include a convention centre, shopping malls and five-star hotels.
An additional casino is set to be built by Crown Resorts' local joint venture partner Lake Leisure Holdings.
2. Exposure to Macau
Macau offers massive potential for Crown Resorts through its 34% share in the Melco Crown Entertainment joint venture. Total gaming revenues for Macau in 2013 are forecast at more than US$40 billion and growth in November alone rose 21% year-on-year.
Macau is home to 35 casinos, with eight more under construction according to Reuters and one Hong Kong analyst has forecast revenues to double by 2018, as Macau attracts a growing number of Chinese and international gamblers.
3. Sydney takeover
Crown Resorts' plan for a $1.5 billion resort in Barangaroo, Sydney, is also a significant long-term growth opportunity. Scheduled to open in 2019, the development has been billed as a 'once in 200-year opportunity' for Crown and will include a six-star hotel to cater for high-rollers.
Foolish takeaway
Shares in Crown Resorts have increased 60% over 2013 and appear to have priced in much of the anticipated growth. Heading into 2014, I would view any dips in share price as an attractive buying opportunity.
