Las Vegas Sands Comes Up Sevens In China

| About: Las Vegas (LVS)

The market is smiling on my growth portfolio this morning. In addition to Qualcomm (NASDAQ:QCOM) just crushing estimates and raising forecasts, my position in Las Vegas Sands (NYSE:LVS) is set to soar today on the back of a very encouraging earnings report. I have had a large position in this casino operator since August. Given this latest read of the company's health, the shares are poised to advance significantly.

Positives from earnings report:

  • Fourth-quarter revenue in Macau (its most important market) rose an impressive 48 percent to $1.97 billion.
  • Overall fourth-quarter revenue gained 21 percent to $3.08 billion, beating consensus revenue estimates of $3.03B.
  • Sands China posted a 52 percent jump in fourth-quarter profit as its newest resort drew more Chinese visitors.
  • Las Vegas Sands announced it is raising its quarterly dividend by 40 percent to 35 cents a share.
  • The company reiterated its plans to sell Sands' Asian shopping malls, which could be worth as much as $10 billion and will free up funds to service debt or to pursue more casino/hotel opportunities.

4 additional reasons Las Vegas Sands is a solid long term growth opportunity:

  1. The stock is a great proxy on the growth in China. Now that the once a decade political transition is complete in the Middle Kingdom, growth there should accelerate boosting tourism & travel to Macau.
  2. The stock is selling for less than 17x forward earnings, reasonable given it is projected to grow revenues some 15% in FY2013 (and look for that figure to be revised up after this latest read of Chinese demand)
  3. Even after its recent run, the stock is still selling near the bottom of its five year valuation range based on P/E, P/S, P/CF and P/B.
  4. An investor is paying less than 14x forward earnings for a stock with five year projected PEG of 1. Revenues should grow faster than 20% (probably closer to 25%) in FY2013.

The stock yields 2.6% after the recently announced dividend hike. The company also just paid a $2.75 special dividend and should funnel a lot of its increasing cash flow into dividends in the coming years.

The company has grown sales at a 27% CAGR over the last five years. S&P estimates the company will grow earnings at a 15% annual clip over the next three years.

Disclosure: I am long LVS, QCOM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.