The credit crisis has made a mess out of Wall Street with many firms mortally wounded, but the damage does not stop there.  Banks have failed or nearly failed, insurance companies the same and the auto industry is in a death rattle.

The failures have been of epic proportion and not limited to smaller entities that had been struggling for years.  We are talking about huge institutions that up until recently were some of the most respected, well-run businesses in the United States.

The worst part about the crisis is that the damage has deep tentacles.  The pain is spreading beyond Wall Street.  Very few industries are immune to the carnage.  We know now that failure can strike anywhere.

What industry is next?

If we look at the market for clues, one sector that may be vulnerable is the casino space.  Stock prices there have absolutely collapsed with many shares now priced at levels whereby investors are expecting the worst.

The industry was in trouble before the crisis.  Fears of an economic slowdown and reduced traffic at monster resorts pressured shares.  Casinos, it would appear, were no longer immune to an economic slowdown.

When the credit crisis hit, things got worse.  In a double whammy, the crisis ensured a slowdown in business, but it also put the brakes on huge projects that were funded with debt.  Without being able to obtain financing for projects, already spent dollars and equity were at substantial risk.

Previous debts required projects to close and generate revenue.  To the extent projects sit idle, debts go unpaid.  Unpaid debts result in defaults.  Defaults result in debt holders receiving some sort of payback that can take the form of preferred stock or outright acquisition of equity.

In those cases, common stock holders are left holding worthless pieces of paper.  Such an outcome is the risk of owning common stock and that risk is front and center for many companies that participate in the casino market.

The industry enjoyed a huge boom over the last 20 years that fueled bigger and bigger projects.  Though those projects generated huge cash flows, they also fundamentally changed the way these businesses make money.

They are no longer pure casino plays.  Instead, they make money from the resort experience.  Fine dining, swimming pools, spas and high end shopping became a big part of the mix.

The trouble is when people tighten belts they stop shopping.  They may still gamble, but those other offerings do not perform during economic downturns.  If you have been to Vegas you know how expensive these ancillary services can be.

No doubt there are serious headwinds for these entities.  The big question is will they survive?  Hard to believe that we even have to ask the question, but that is the nature of the beast.  It is also, from a contrarian perspective an opportunity.

Here are two names that I think will survive and ultimately thrive once we pass this recession.

Las Vegas Sands (LVS)

Earlier last week investors pushed LVS below $5 per share for the reasons mentioned above.  Default risk on debt became front and center concern for equity holders.  No matter that the Adelson family announced last Friday that they would be participating in a capital raise for the company.  With few details on the plan investors were unimpressed. 

That all changed on Wednesday when fellow casino operator, MGM Mirage announced capital spending cuts and financing for its City Center project.  LVS zoomed higher on the news more than doubling in value.  Recently, LVS was up another 20%.  Did you miss the opportunity?  No, you did not miss the opportunity.  Shares in early September were trading for nearly $50 per share.  I see this company doubling in value or more over the next 12 to 24 months.  Not a bad speculation.

MGM Mirage (MGM)

A multi billion dollar project being constructed as the market is collapsing is not a good thing.  That was the situation for MGM’s City Center.  Making matter worse was a complete freeze in the lending business.  Will the project stall or worse, fail? 

On Wednesday we got some answers as the company announced bank lines that should and project spending cuts that should allow MGM breathing room.  After seeing its shares fall below $10, MGM is now up to $16 per share.  That’s a far cry from the near $40 fetched in early September.  There is more meat on the bone.  I would buy MGM here.

I love the casino space.  They make money on huge margins.  A slowing economy is but a blip and the credit crisis only provides an opportunity to own shares at a discount.  If you are reluctant to buy one or two stocks in the group, you can own a mutual fund that owns casino stocks.  A very small fund from Ladenburg Thalman (LTS) may be worth considering.  The Ladenburg Thalmann Gaming and Casino Fund (GACFX) is a newer fund with less than $2 million in assets and focuses on buying casino stocks.  That may be a good way to obtain diversification in a sector that appears to be undervalued at the moment.

This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, go to: www.InvestorPlace.com.