Next week, I'll be attending a conference in Las Vegas and
while I doubt I'll do much gambling, many others are flocking to
casinos there and abroad as the economy recovers.
Just last week, in fact,
Las Vegas Sands (
crushed analysts' estimates for the third quarter. The company
reported earnings of 34 cents per share versus three cents a year
ago, blowing away forecasts of 23 cents. And Las Vegas Sands'
revenue soared 67% to $1.91 billion, coming in above estimates of
The growth was largely fueled by solid growth at the company's
Sands' Macau property and the first full quarter of its Marina
Bay Sands Singapore operation. Staking a claim in the
fast-growing emerging markets has helped Las Vegas Sands
According to Macau's Gaming Inspection and Coordination Bureau,
gambling revenue for all casinos operators there surged 40% to
$1.91 billion in September alone! That's the fourth highest
number this year.
And Las Vegas Sands' growth in its original stronghold is doing
well too. The revenue from the company's main strip of casinos in
Las Vegas jumped 21% to $544.4 million in August.
This is what Editor Michael Cintolo had to say about the company
recently in Cabot Market Letter:
"In Macau, [Las Vegas Sands'] cash flow surged a very healthy 40%
and now accounts for fully half of the company's total. More
impressively, in Singapore, the Marina Bay Sands might be the
most successful new casino of all time; revenues for the quarter
totaled $486 million (this comes less than six months after
opening) and cash flow was a whopping $242 million. Unbelievably,
management thinks that this one property alone could produce
upward of $2 billion of cash flow in 2012. Imagine!
"It's no surprise, then, that analysts have rushed to hike their
estimates going forward. The average earnings estimate for next
year was $1.05 two months ago. Now it's up to $1.62! And,
clearly, if Asian economies (many gamblers in Macau and Singapore
come from other countries) continue to expand, there's no reason
Sands' casinos can't keep performing better than investors
" … Las Vegas Sands has been an outstanding performer, and things
have gotten even better since the company reported blowout
earnings last week; sales and earnings crushed expectations, and
the stock has taken flight since that report. While we remain
very bullish on the firm's longer-term future, the stock is now
extremely elevated above any support, and is showing signs of
shorter-term exhaustion. Thus, we're going to do some offensive
selling (on the way up in price), letting go of one-third of our
shares here and putting the rest on hold. We plan on giving our
remaining shares plenty of room to breathe in the weeks ahead."
Since Mike recommended LVS to Cabot Market Letter subscribers,
the stock has more than doubled … and it's up another 50% since
he recommended adding more shares in September. As Mike says
above, the stock is way overextended now after its huge run, so
this probably isn't the best time to start a position. But we
still love the long-term story and don't think the stock is going
away any time soon.
While Las Vegas Sands is the leader of the casino group, another
Wynn Resorts (
, has been doing well lately, also boosted largely by the growth
in Asia. Here's what Mike had to say about it in a recent issue
of Cabot Market Letter:
"While Las Vegas Sands (
) is the leader in the gaming group, Wynn Resorts has its own
great story, with the Wynn Macau, Wynn Las Vegas and Encore at
Wynn Las Vegas pulling in the dough. Wynn booked a whopping 478%
increase in earnings in Q2, with a 43% gain in revenues. And with
the giant Wynn Macau (nearly 400 game tables, 1,200 slots and six
restaurants) providing access to the increasingly wealthy Chinese
population, investors are expecting great results when the
company reports Q3 results on
November 2. WYNN has lagged LVS for a while, but the stock took a
huge leap last week, pushing the stock to new multi-year price
and RP highs and showing that there's more than one way to play
the Macau connection."
The company reported Q3 fiscal results on Monday. Wynn saw
revenue climb 29% to $1 billion, beating analysts' expectations
of $990.8 million. The company earned 39 cents per share, in line
with the average Wall Street prediction. But the real news is
that the company's Macau revenue surged 50%. Like LVS, WYNN has
been on a tear and may need some time to rest. But also as with
Las Vegas Sands, we still believe in the long-term growth story
at work here.
For more on Las Vegas Sands and other leading growth stocks,
Cabot Market Letter
, where you'll find in-depth fundamental and technical analysis,
Buy, Sell and Hold advice, as well as our proprietary market
In this week's Stock Market Analysis Video, Cabot China &
Emerging Markets Report Editor Paul Goodwin says that it's been a
good week in the markets. Paul takes a look at the stocks that
had the biggest gains on Thursday, when the market hit its
highest level since September 2008. Stocks discussed include
), Mexco Energy (
), Sunrise Senior Living (
Westwood One (WWON)
Click here to watch.
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Until next time,
Editor of Cabot Wealth Advisory