Casino stocks are surging, but are they a solid bet?

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The chips seem to be falling into place for casino stocks, but investors keen on hitting the jackpot may need to take a step back.

The biggest names in the business have seen their stocks surge in the past month or so. Las Vegas Sands has rallied around 6 percent this week so far since reporting earnings Monday, and rival Wynn Resorts, which has yet to release earnings, has also surged 46 percent year to date. Rounding out the international names is Melco Crown, which looks to be recovering with a 10 percent rise this quarter alone.

But a report released by Stifel Nicolaus on Monday evening suggested that investors may want to be careful before betting on the casinos. The report gave a price target of $56 for Las Vegas Sands and a generally positive outlook for the casino giant. But it also mentions that investors should watch for a recovery in the casino business and wait to see how the industry reacts to new openings.

The key, according to Stifel Nicolaus, lies with Macau.

"An improved Macau macro environment would strengthen our conviction in our constructive long-term outlook for the Macau market and the shares of its largest player," Stifel mentioned in its Monday note.

Both Las Vegas Sands and Wynn Resorts have big stakes in Macau, a special administrative region of China known for its vibrant gambling industry. In fact, the story behind Las Vegas Sands' surge in spite of the earnings miss hinges on the fact that June was the first month since September 2014 when mass gaming volume and revenue actually increased year over year.

Las Vegas Sands CEO Sheldon Adelson himself emphasized the importance of his company's Macau names in the Q2 earnings call on Monday, saying that "when it comes to emerging market opportunities, we are unique in the absolute scale of our cash flow as well as our dominant share of the industry's cash flow."

Adelson was also asked about competitor Wynn's plans in the region, as the latter is set to open its third resort in Macau in August. This is just one month before Las Vegas Sands opens the doors to its own highly anticipated resort, The Parisian, showing the intensifying competition in the area.

However, though casinos may have seen growth as of late, there could still be a ways to go before casino stocks can get onto solid footing. Las Vegas Sands, for example, saw its gaming business lag behind other sectors of the company like retail, and while Macau might be an overseas beacon, the company's Marina Bay Sands resort in Singapore actually saw a decrease in gaming volume instead.

This means that though casino stocks may be an attractive bet as of late, only time will tell whether June's numbers will hold.