Las Vegas Sands (LVS) has not been kind to my portfolio since I added it in late April on the back of a blowout earnings quarter. Concerns about a slowdown in China and tepid gaming activity in Vegas knocked the shares down some 40% at its nadir recently from where I originally took a small position. However, the environment seems to be turning more positive, the stock has bounced off technical support and the company seems to regaining momentum. I doubled my stake in the stock last week.
Recent positives for Las Vegas Sands:
- Lazard's analyst Jake Fuller came out today and reiterated his buy rating on LVS. He calls it his top pick in the sector based on its position in the mass market and positive trends recently in Macau. He also states the company has the capacity to increase its buybacks and dividend payouts due to its cash flow.
- UBS also opined on the upward trend in Macau in mass market gaming, calling LVS the best positioned firm within this segment.
- Finally, Imperial Capital upgraded the shares from "in-line" to "Outperform" last week as well.
- The company's next phase of its property on Cotai is due to open in the next month which should generate positive headlines.
- Hong Kong just posted record air traffic for July. This should bode well for Macau gaming revenues given it is just across the bay.
"Las Vegas Sands Corp owns, develops, and operates various integrated resort properties primarily in the United States, Macau, and Singapore." (Business description from Yahoo Finance).
Four additional reasons LVS is a good long term pick up for under $43 a share:
- The stock is selling near the bottom of its five year valuation range based on P/E, P/S, P/B and P/CF. The median price target held by the 23 analysts the cover the stock is $65, roughly 50% above the current stock price.
- The company averaged better than 20% revenue growth over the past five years and the stock sports a five year projected PEG going forward of less than 1 (.90).
- LVS has a solid balance sheet, quadrupled operating cash flow from FY2009 to FY2011 and pays a dividend of 2.4% to boot.
- The stock bounced nicely off technical support and recently crossed over its 50 day moving average (See Chart)