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:
- 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.
- 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)
- 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.
- 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.