Two sectors that I believe will have stellar years are the casino and tobacco groups.  Below are some reasons for my bullishness.

Casinos

I've liked the casino group for many months.  It has been a top performing sector for quite some time.  Who can blame investors for wanting to own a piece of Vegas.  It's boomtown in Sin City.  Besides Vegas, China has become a hotspot, specifically Macau, which is adjacent to China and Hong Kong.  The big player here has to be Las Vegas Sands, with six projects in the works on the small island nation.  With 2 billion in population, a surging economy and a government slowly embracing capitalism, this is the tip of the iceberg.  Others with a presence include Wynn, MGM and some other private entities.  This flow of people and money are a wildcard, but the upside is enormous.  Already this year Wynn and Sands are up 10% or more.  Another reason for optimism is the consolidation that is occurring.  Harrah's is about to be bought, Station has been taken by LBO, and others are rumored to be in the works.  With fewer names on the block, it means the survivors will get the investor dollars, as long as growth prevails.

Casino/Gaming Index (based on SIC codes)

Tobacco

Another solid group for the year.  This group has been strong of late and continues to soar.  Prices of cigarettes are going up, and smokers will pay (in more ways than one?).  One name that lights up is Altria, or big MO.  The company is diversified, has a lot of cash and has high institutional sponsorship.  Once a target of costly lawsuits, it seems that all of these decisions continue to fall in their favor.  This was clearly one of the best stocks in the Dow in 2006.  Riding their coattails are Carolina Group (CG) and UST.  These are also strong and poised for big gains in 2007.

Tobacco Index (based on SIC codes)


Price Headley is the founder and chief analyst of BigTrends.com.