Las Vegas Sands (NYSE:
, a leading developer and operator of gaming resorts in the U.S.
and Asia, has the combination of a strong chart and powerful
fundamental growth story. Since its June 2013 low, shares have
surged nearly 85%, and the company has strong revenue and
earnings' growth potential.
#-ad_banner-#Las Vegas Sands' luxurious properties house
classy convention centers, elaborate exhibition facilities,
premium hotel accommodations, upscale retail outlets, and most
importantly, world-class gaming and entertainment complexes.
While the company obviously operates in Las Vegas, its facilities
have become especially popular in Macau.
Macau is China's only legal gambling district. An Asian casino
hotspot, it has wrested the title of the world's casino capital
from Las Vegas.
Since 2002, when China opened Macau to foreign casino
operators, gaming revenue has surged from less than $3 billion a
year to $45 billion in 2013, which represents a 19% increase from
2012. In comparison, Las Vegas has struggled to recover from the
financial crisis, and 2013 revenue was up just 3% year over year,
to $6.4 billion.
This year, Deutsche Bank analysts project gambling revenue in
Macau will rise 20% from 2013 levels. By 2017, analysts at
brokerage firm CLSA expect $77 billion in revenues.
Las Vegas Sands is poised to cash in. The company is
feverishly building new facilities to cater to this growing
market. Its newest complex, called the Parisian Macau, set on
Macau's Cotai Strip, is set to open in late 2015. Management
anticipates the new facility will "provide an outstanding
platform for growth in the years ahead."
Management is clearly confident about future growth, and
traders have been cashing in.
In 2007, LVS peaked near $140. However, it fell victim to the
global economic recession with its associated downturn in
gambling revenue. Shares plummeted to an all-time low below $2 in
Shares steadily recovered from that low, delivering a nearly
40-fold return before peaking in the mid-$50s in late 2010. LVS
then traded sideways from 2011 to 2012, testing support near $32
and resistance between $43 and $45 three times. Shares finally
broke out above $45 in April 2012, but the breakout turned out to
be a false one. LVS turned down and fleetingly violated $32
Recovering off a July 2012 low, a major uptrend formed. Not
unexpectedly, resistance was encountered in the $50 range for
much of 2013. When LVS decisively moved past $60 in September, it
surged to the low $80s before retreating in the January
Shares bounced back in February and are now trading near their
multi-year highs above $88. A band of support exists at just over
$82, a level the stock consolidated at in January and late
February before again breaking out.
With no nearby resistance in sight, shares could move higher.
The next likely major resistance is the round-number
psychological barrier of $100. At current levels, this price
target represents 15% potential returns. Eventually, LVS may be
able to challenge its all-time highs around $140.
The bullish technical outlook is supported by strong
Analysts project first-quarter 2014 revenue will increase
15.3% from the same period a year earlier to $3.8 billion. For
the full year, analysts anticipate a 15.5% year-over-year
increase to $15.9 billion.
The earnings outlook is equally optimistic. Analysts estimate
first-quarter earnings will increase 28% from the year-earlier
period, to $0.91 per share. For the full 2014 year, analysts
expect earnings to rise 31% to $3.79 per share.
In addition to a bullish technical and fundamental outlook,
the stock has a reasonable forward dividend yield of 2.3%. The
company paid its first annual dividend of $1 in 2012. Management
has doubled the payment in only two years, so the possibility is
there for future dividend increases as earnings rise.
Risks to Consider: While Macau is developing quickly, an
economic slowdown in China could stall growth. However, since the
resort draws tourists from all over the region, the slowdown
would have to affect many Asian economies to see the company's
fortunes significantly contract.
Action to Take -->
-- Buy LVS at the market price
-- Set stop-loss at $82.29, just below current support
-- Set initial price target at $99.95 for a potential 15% gain by
This article was originally published at
Casino Stock Could Surge 15% No Thanks to
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