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Analyst: IGT Stock is Sound

A Glance at International Game Technology

International Game Technology's principal activities are to develop, manufacture, and distribute a broad range of microprocessor-based gaming machines. The products offered consist of traditional spinning reel slot machines, video gaming machines, and other video gaming devices. From a technical perspective, IGT has been a bastion of strength despite the turbulent market environment. As the longer-term chart below illustrates, the stock continues to trade in the vicinity of its recent all-time highs.

Fundamentally speaking, the stock is sound. In its November 7 earnings announcement, IGT reported fourth-quarter earnings of 95 cents per diluted share versus 73 cents per diluted share in the prior year period. One additional potential positive catalyst concerns the recent mid-term congressional elections. Specifically, governors elected in states that have gaming issues on the table (such as Pennsylvania, Maryland and Kansas) have indicated support for some form of gambling. Should any of these issues pass, IGT would be a direct beneficiary.

Despite the strong fundamental and technical drivers, it is interesting to note that speculators continue to shy away from the shares. On the options front, players maintain a complacent attitude with respect to the stock. In the December options series, the heaviest level of open interest is a mere 1,486 contracts located at the out-of-the-money 80 call. As for stock players, current short interest of 4.5 days to cover could certainly provide a boost for the equity should the rally continue to play out. Overall, the combined technical, fundamental and sentiment factors point to a continuation of IGT's strength in the near term.

Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a diversified financial information and trading resources company with subscribers in over 110 countries. It publishes Bernie Schaeffer's Option Advisor, the nation's leading subscription newsletter devoted to options, as well as many other educational, bulletin and alert services..

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