MGM Mirage (NYSE: MGM) is making headlines today after quadrupling its fourth-quarter net income on strong casino performance combined with a huge outside investment. Net income climbed to $872.2 million from $201.6 million a year ago with revenue increasing 4.5 percent to $1.93 billion, both of which exceeded analysts' estimates. These results were partially driven by a 5% increase in hotel revenue, a 2% increase in gambling revenue, and a 17% increase in lucrative baccarat volume.

Though MGM's core businesses of resorts and gambling seem strong, especially given the economy, they fail to account for the monstrous climb in net income. Instead, it was largely helped by Dubai World's $3 billion investment in MGM related to its CityCenter project - a new mega-resort on the Las Vegas Strip. This investment led to a one-time gain for MGM of $1 billion.

"Even while closing on the most historic transaction in our company's history - the CityCenter joint venture and strategic relationship with Dubai World - our dedicated employees delivered exceptional operating results," CEO Terry Lanni said, noting that the company is "ideally positioned to excel domestically and internationally." Though the deal with Dubai World is ironic given that gambling is banned in Dubai, most analysts agree that the partnership is good for MGM because of Dubai World's very deep pockets and extensive experience with real estate projects.

MGM is seeking such partnerships as it attempts to expand its existing Las Vegas holdings but enter into Atlantic City and abroad. MGM now sees itself not as a casino operator but a resort brand, and it is attempting to leverage that brand in new markets.

MGM operates resorts such as the Bellagio, Mandalay Bay and Circus Circus in Las Vegas, the MGM Grand Detroit aptly located in Detroit, and a casino property in the Asian gambling mecca Macau. Though gambling revenues are notoriously unpredictable, MGM is positioning itself strongly across markets through strategic partnerships and may preform accordingly in the coming years.

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Concord Camera Corp. (NDAQ: LENS) has more to worry about than a cold market as activist shareholders are now (in so many words) calling for an outright sale. The camera-maker has experienced steep declines in sales and margins that have resulted in over fifteen consecutive quarters of losses. This prompted the company to pursue its own evaluation of strategic alternatives as many are speculating that a financial buyer may be willing to step in and acquire the company at a premium. So, does this make LENS a buying opportunity before such an announcement?

Concord is engaged in designing, developing, manufacturing and selling single-use and 35-millimeter traditional film cameras. The firm manufactures the cameras in China and hands them over to retail distribution partners who put them on store shelves around the world. This is a market that still exists thanks to tourism, but faces steep declines in sales as digital cameras continue to replace traditional film cameras. Worse, the company is operating on razor thin margins due to its middle-man nature that makes it hard to compete effectively on price with a growing number of manufacturers that are doubling as distributors.

Everest Special Situation Fund recently purchased a five percent stake in the company and communicated their belief that Concord shares are extremely undervalued despite poor operating performance. The activist fund believes that the company is in an excellent position to initiate “substantial changes” to its business. To this end, the board of directors announced that their special committee established to explore strategic alternatives was close to making a decision. However many investors, including Everest, are worried that the result may be that the company is best off taking the lonely road rather than pushing for a sale.

Everest demanded (in so many words) a sale in its February 20th letter to the board. The fund noted that it has collaborated with a number of companies in situations similar to Concord’s in the past, acting as a liaison between investors and acquiring companies. Everest urged the board to utilize their expertise and pursue strategic alternatives or else they would seek representation on the board to protect their rights as stockholders and unlock value. Clearly, many people are looking for Concord to put itself up for sale at this point in order to reverse its sixteen straight quarters of losses and maximize value for stockholders. Indeed, privatizing the company alone would substantially reduce expenses for a company with a market cap of just $25 million!

In the end, Concord is a company that may be of interest to a financial buyer as its shares are extremely undervalued. In fact, privatization alone would likely save the company enough money in public company costs to justify a takeover. Many shareholders are in support of such a decision, but fear that the company may put up a fight before pursuing alternatives. Combined, these factors make LENS a stock worth watching closely over the next few months!

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The Procter & Gamble Company (NYSE: PG) recently announced that it would split off its Folgers coffee division into a stand-alone company. The conglomerate would offer its shareholders the opportunity to participate by exchanging their P&G shares for stock in Folgers. Interestingly, many analysts are expecting P&G to sweeten the deal by offering an attractive rate of exchange on Folgers stock to draw interest in the new company. This has many opportunistic investors watching to see just how sweet the deal will be as it could represent a great investment opportunity. So, is this a stock worth watching for your portfolio?

Foldgers will be a single product company in a difficult market once it splits off from its parent. The coffee maker may dominate the ground-coffee market in the U.S. with $1 billion in sales, but it is quickly losing ground to specialty coffee makers as demand for its plain-vanilla coffee is declining. Competitors like Starbucks Corporation (NYSE: SBUX) are stepping in to take their place. In fact, many are speculating that P&G is divesting the segment because its sales growht is below that of the conglomerate’s annual target. Foldgers will likely face a difficult market on its own and may require some work in the future before it can start posting impressive growth numbers.

So, why is Foldgers such a great deal then? The first thing to consider is that P&G will likely be forced to offer an attractive valuation that will provide some immediate returns to shareholders. Secondly, the coffee maker may attract some interest in this financial environment because it is in a sector that is relatively insensitive to economic problems. Third, Foldgers will have a market cap small enough to make it a potential acquisition candidate for foreign companies looking to leverage the cheap dollar. And finally, spin offs statistically tend to outperform the overall market during their first two years for a variety of reasons.

In the end, it is likely that most P&G shareholders will opt out of exchanging their shares because they like the safety of P&G. However, there are many catalysts that could propel this new company to new highs and this may be a great opportunity to get in at a steep discount. Combined, these factors make PG a stock worth watching closely as it moves closer to splitting off its Foldgers division!

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