James Packer-led Crown Resorts Ltd. (ASX: CWN) is trading only slightly above 52-week lows reached in January after disappointing results from the company's Macau partnership led investors to sell down the stock late last year.
Worried traders cut their stake in the luxury resorts and gaming company as concern over reduced income from Macau threatened to hurt the bottom line. But the share price enjoyed a subsequent 30% surge into February and had investors cheering louder than a table full of craps players at Melbourne's Crown Casino.
That rally was supported by a weaker Australian dollar and hopes that the Queensland government would announce Crown as the winner of the tender for the Queens Wharf Casino in Brisbane.
The Queensland state election at the end of January put the brakes on the Queens Wharf announcement (which was loosely scheduled to be made "in early 2015") but with the Aussie dollar sinking lower in recent days, the same catalysts again exist to propel the share price higher.
Crown Resorts' share price has since slid back below the $13 mark, sitting at a price-to-earnings ratio of 18.5. Some investors will no doubt be tempted to try and pick the bottom of the market and get in before a potential windfall if Crown were to be awarded the opportunity to develop the Brisbane precinct.
At the current valuation, a 2.8% dividend franked at 50% gives buyers some reassurance to ride out any further share price falls in the short term should Queensland choose rival casino operator Echo Entertainment Group Ltd. (ASX: EGP).
Long-term holders of Crown Resorts are sitting on a very tasty share price increase since 2012 and can continue to look forward to further gains as it realises many of the other projects already approved and in the pipeline.
Just this week the company reported to investors that it has entered into agreements with the Barangaroo Delivery Authority and Lend Lease that give it the opportunity to further develop the Crown Sydney site at Barangaroo South, subject to receipt of New South Wales planning approval.
Crown Resorts also has current projects in Las Vegas, Manila and Macau as it extends its luxury resorts brand to distant shores.
Closer to home, the recent partnership with BetEasy to form sports bookmaker CrownBet in December last year looks to have bedded down well and will continue to diversify Crown Resorts' domestic wagering operations.
Foolish takeaway
The growth opportunity that Crown offers is tantalising, but investors need to have an appetite for risk as the share price is in a constant state of flux and any adverse announcements can send its traders into overdrive.
The company is poised to cash in long term on the burgeoning Asian middle class with resorts catered directly to that ever-growing tourism market.
Picking the bottom of the stock cycle is a dangerous game, but those willing to roll the dice on Crown Resorts can do so knowing they are buying a solid, long-term earner trading at a reasonable price.
