Union gaming group of Las Vegas announced last month that its subsidiary, Union Gaming Research, will focus its attention on 17 gaming companies, among which MGM Mirage and Bally Technologies are top picks.

The group does not use traditional ratings and price targets, instead relying on information tailored to each client, as well as the expertise Union Gaming Group founders bring to the table.

“Given the complexities of markets today, investors require tailored service and deep industry expertise, rather than the traditional 'one size fits all' model,” Bill Lerner, a Union founder and former Deutsche Bank analyst, told the Las Vegas Sun.

In its report, Union Gaming Research said that while recovery has started, it may take some time to complete.

“Valuations have climbed from their March 2009 lows to near their historical averages demonstrating that the specter of bankruptcy for major public gaming companies is in the rearview mirror. However, the consumer-led recession has likely instilled a permanent valuation change for casino operators as the business is more cyclical than had previously been thought,” Union Gaming said. “The stocks are now trading more like traditionally cyclical businesses ... We believe it will be many years (if at all) before the lofty valuations seen in 2004-2007 return."

Among top picks, the group mentioned MGM Mirage, Bally Technologies and Galaxy Entertainment.

“We believe that CityCenter is poised to outperform the conservative expectations investors have established upon its phased opening beginning later this year,” Union Gaming said. “Although it is too early to call a trend, numerous variables suggest a bottom is near: May 2009 revenues were down only 6.4 percent; average daily room rates are moving higher at certain properties without sacrificing occupancy; convention bookings have re-accelerated and second quarter airlift at McCarran improved sequentially.”

Bally Technologies is in a good position to tap into a so-called “dual cycle” in which existing casinos are suddenly in a rush to replace aging machines while overall industry growth creates additional markets for the company to expand.

The report also predicts revenue growth for Boyd Gaming, Harrah’s Entertainment, Station Casinos and Wynn Resorts in 2009 and 2010.