Place Your Bets on MGM Mirage

Cramer’s trashing of all things Vegas in favor of Macau has come to an end, it seems. On Friday, he recommended MGM Mirage as a speculative play on Sin City.

The “Mad Money” host turned the American gambling mecca when the Great Recession hit. If people didn’t have the money pay the bills—heck, if they were losing their jobs—there’d be no vacations filled with craps shooting, poker playing of slots pulling. The same went for businesses, who cut back on spending and, as a result, those conference trips to the Las Vegas Strip.

This is when Cramer turned to Macau, China’s answer to Vegas. He’d only recommend those casino companies with a strong presence there, such as Wynn Resorts and, more recently, Las Vegas Sands . But there’s a turn happening in Nevada now that he said can’t be ignored. Average daily rates and occupancy, two key metrics for the industry, are stabilizing, and the rash of building that overwhelmed the city is over. And Strip gaming revenues for August were up 21 percent year-over-year versus a flat number the month before.

The shift has directly affected MGM , which earns 83 percent of earnings before interest taxes, depreciation and amortization from Vegas, for the better. So much so, Cramer said, that “virtually everything about MGM that used to be a negative is now a positive.”

Where once being the largest casino operator in town, with 40,000 hotels rooms and more than 1.25 million square feet of gaming space, was a liability, MGM now can capitalize on its holdings as the gaming business rebounds. That shown through in the latest quarter reported on Wednesday, where earnings were in line with the company’s October pre-announcement.

There are bad-to-good stories to note here as well. MGM’s $8.5 billion joint venture with Dubai World, the Aria CityCenter project, which opened at the worst possible time—December 2009—is now profitable and occupancy rates are up. Also, MGM’s overall revenue per available room, a key metric in the lodging biz, was positive in October, and management is expecting a strong fiscal 2011. Luxury properties Bellagio and Mandalay Bay are doing well. And that convention business is on the upswing to boot.

Cramer also likes the fact that MGM’s balance sheet has improved dramatically, with the company holding enough cash to pay all debt coming due through 2013. And he also likes the Godfather 2 connection here: Like the Corleone’s had Senator Geary in their back pocket, MGM just may have Senator Harry Reid on its side. MGM was a big donor to Reid’s campaign because, said CEO James Murren, “he’s helped our company and he’s a very powerful force.” Who knows how that could translate into still more positives for this company.

Just to be clear, though, you must know that Cramer views MGM as a roll of the dice, not an “all in” proposition. It will take some time for both Las Vegas and the company to claw its way back. But with the stock at about $12 and people headed back to tables, he thinks it’s worth at least a little speculation. His strategy? Those monthly gaming numbers can be lumpy, so look to pick up some MGM on weakness if the number’s bad at some point.

“Las Vegas is coming back,” Cramer said, and “MGM’s the best way to speculate on the turn, especially considering that they helped get Senate majority leader Harry Reid re-elected.”

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