Not all casino stocks are created equal. Some are a whole lot more equal than others, to paraphrase the late, great stock seer George Orwell. But the market treats all the gaming stocks as if they're the same, and that's just not right, Cramer said Monday.
Take the case with MGM Mirage . Last Wednesday they preannounced ugly, disappointing first quarter guidance, with most of the shortfall coming from weakness at its Strip and CityCenter properties in Las Vegas. As a result, MGM's stock took a 6 percent hit.
"That makes sense, but Wynn's stock was also down, Cramer said. "What a classic buying opportunity because this coming Wednesday, Wynn is opening what might be its most profitable Casino ever, the Encore in Macau, so you are getting this stock well below where it would be without the bad news from competitor MGM."
Most of the problems at MGM Mirage are either company-specific issues or Vegas-specific, Cramer noted. So what's bad for MGM isn't necessarily bad for Wynn.
"MGM is by far the dominant player on the Las Vegas Strip, and right now those properties...are not doing well," Cramer said.
Revenue per available room on the strip — a key metric in the lodging business — decreased by 8 percent in the first quarter of 2010, and total casino revenue is expected to be 5 percent lower than last year, with slots revenue down 1 percent per quarter.
In short, Vegas is hurting, and MGM, as the premier Vegas play, is hurting, too.
"Wynn, on the other hand, is now mostly a play on Macau, the only place in China where gambling is legal," Cramer said. Wynn, with a terrific balance sheet versus MGM, should never have been down off MGM's negative preannouncement, he said.