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Doubling Down On Las Vegas Sands

Jan. 21, 2020 11:17 PM ETLas Vegas Sands Corp. (LVS)18 Comments

Summary

  • Las Vegas Sands stock has taken off since our bullish article in December.
  • I explain how Xi Jinping's visit to Macau, the signing of the Phase I trade deal as well increased bullishness from market participants make a strong case for the stock.
  • We are doubling down on Las Vegas Sands, since we expect it to do very well in 2020.

Written by Sam Kovacs

Introduction

In early December, Robert announced he had initiated a half position in Las Vegas Sands (NYSE:LVS), stating that the company was “worth a gamble”.

Source: Open Domain

Since then, the stock has returned 14.68%, clearly beating the S&P 500. At the time, Robert only initiated a half position, as we decided it would be worth monitoring the evolution of the environment in Macau before completing the position. This initial investment was timely and has set the stage for him to double down on his position. I will be also initiating a position, since I believe the opportunity is just too good to pass up.

While the price has hit Robert’s initial target of $70-72 in just 5 weeks, 3 key events have happened that improve the environment in Macau:

  1. Xi Jinping recently visited Macau.
  2. Trump signed the Phase I trade deal.
  3. LVS has found renewed bullishness from market participants.

I will walk through each of these events before considering how they make the case for LVS, even with the price 14% higher than when we first recommended the stock.

Xi Jinping’s visit to Macau

On the 18th of December, the Chinese president visited Macau, where he praised the SAR’s implementation of the “One country, two systems” policy. A plethora of new favorable policies were announced in an effort to diversify Macau. The strategic aspects of such an endorsement for Beijing’s government cannot be overlooked. To fully understand them, we must realize that China’s Special Administrative Regions (SARs) are a tale of two cities: Hong Kong and Macau.

Both gained their special status when previous colonial empires returned the city-states to China at the turn of the century. The United Kingdom’s 99-year lease came to an end in 1997. Note that when the deal was signed in

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Analyst’s Disclosure: I am/we are long LVS. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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