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WMS Industries
(WMS) P/E: 19.7, EPS Growth: 25%

Are you a player? Take a chance with gambling machine supplier WMS Industries and you could end up hitting the jackpot.

"We view them as the Apple of slot machine companies -- they are always the most innovative, and they carry the must-have games that casino operators all want," said Joel Simkins, an analyst at Macquarie Securities, which covers 21 gaming and leisure stocks. WMS is his top pick because of its potential for future growth.

Despite its low level of debt and strong balance sheet, the stock is down more than 20% since its October peak due to concerns about sluggish demand from casinos. But with expected earnings growth of 20% this year and as more states legalize gambling and add slot machines, this could be your chance to get hitched to a rising star.

Maryland, Kansas, Ohio and Illinois have all approved the expansion of casinos and slot machines in the past few years and Simkins said he wouldn't be surprised if at least 80,000 new games are added across the U.S. over the year. More locations and more games to choose from will help to significantly boost the company's business.

The company will receive an additional surge in revenue as existing casinos begin to order replacements for their (older) machines at the end of the year, said Simkins.

WMS also hopes to jump start its international sales by entering the rapidly growing gaming market in Australia in the third quarter of this year.

--Blake Ellis

NEXT: Dress Barn

Last updated February 13 2010: 11:57 AM ET
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