Many financial advisors believe that if you have $10,000 to invest, you would be better off putting it in an index fund instead of individual stocks. While that's certainly a sound, low maintenance strategy, investors also shouldn't underestimate the power of $10,000 to crush the overall market when invested in the right stock.
Source: YCharts
How Las Vegas Sands' big bet saved the company
Casino operator Las Vegas Sands sank to an all-time low of $1.42 per share in March 2009 at the nadir of the financial crisis. Sales were plummeting as cash-strapped customers stopped spending money at its casinos and hotels, and its debt levels were surging due to its new projects in Macau. At one point, Sands was reportedly losing $1,000 per second.
To prevent Sands from going bankrupt, chairman and CEO Sheldon Adelson loaned the company $1 billion of his own money. That move bought Sands the time it needed to pull out of its nosedive and open new casinos in Macau. Soaring visits in Macau quickly made China a much more profitable market than Vegas, and its revenues soared.
Source: YCharts
If you had faith in Adelson's long-term plans for Macau and bought 7,042 shares of Las Vegas Sands at $1.42 per share for $10,000, your stake would now be worth nearly $392,000 today. Moreover, Sands now pays a 5.2% forward dividend yield, so you would be paid more than $20,000 in annual dividends on your initial investment of $10,000!
Shares of Sands were weighed down over the past year by concerns about sluggish spending in Macau amid weaker economic growth, a crackdown on corruption in China, and tighter regulations of junkets. However, both Vegas and Macau recently posted positive annual monthly growth in gambling revenues, indicating that Sands and its casino peers could be well-positioned for higher growth in the near future.
How can you spot the next Taser or Sands?
Taser and Sands might seem like great investments in hindsight, but it took a sharp contrarian eye, faith in their long-term growth plans, and nerves of steel to invest in either company while investors were running for the exits. Therefore, to spot the next 30- to 50-baggers in this market, investors should heed Warren Buffett's advice to "be fearful when others are greedy, and greedy when others are fearful."
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Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Taser International. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
