Take a Gamble on Las Vegas Sands (LVS)

If you want a volatile stock with a lot of potential upside, then you should take a look at Las Vegas Sands (LVS), operator of the Venetian Hotel Casino and Sands Expo Center in Las Vegas. Las Vegas Sands also takes pride in being the first U.S.-owned casino in the Macau. Macau is the popular Chinese gaming island off the southeast coast of China.

Macau, China and Beyond

Venetian Macau, the first of seven Cotai Strip Las Vegas Sand’s properties, will open in late August. LVS President William Weidner predicted recently that the average stay in the $2.5-billion dollar Macau casino hotel will be 3-4 days compared to the current average rate of stay in Macau resorts at 2 days. Longer stays equate to more demand for rooms and more gambling revenue. After all seven casino resorts are completed and opened, Cotai Strip properties will feature approximately 2,900 table games, 16,000 slot machines, and approximately 20,000 hotel rooms. LVS also opens the Palazzo on the Las Vegas Strip later this year, a 5,000 slot casino opening 2008 in Bethlehem, Pa., and the Marina Bay Sands opening 2009 in Singapore.

Occupancy rates

In 2006, the Venetian had an daily average occupancy rate of 98.7%. People love to gamble and Texas hold ’em is becoming a staple on ESPN and other cable channels so I can’t see those occupancy rates dropping drastically anytime soon. Occupancy at the new Venetian hotel casino in Macau is expected to reach close to 100% one month after opening.

Global Gambling Increasing

According to a PricewaterhouseCoopers LLP report in late June, global gambling revenue is expected to hit $144-billion in 2011 from 2006 global revenue of $106-billion. Most importantly for Las Vegas Sands, the Asia Pacific revenue is expected to grow 15.7% annually to $30.3-billion from $14.6-billion, making the Asia Pacific gambling market the second largest in the world. U.S. Revenue is expected to grow 6.7% a year to $79.6-billion from $57.5-billion.

Faith in Company
Before investing in LVS, it is interesting to note that CEO/Chairman Sheldon Adelson owns about 70% of the outstanding shares.

I did buy shares in late June, and I can’t say that the current price is a true bargain to buy Las Vegas Sands. The stock even made an upward spike today after favorable earnings. The big news was that net revenue rose 18.6% to $612.9 million, beating the average analyst estimate of $571.6 million. But based on the positive aspects of the global gambling market and the high potential of Las Vegas Sands brand casinos in both the U.S. and Macau, it’s definitely worth taking a look. Sometimes when you gamble, you have to think “Do I feel lucky?”

Other Casino Options

If LVS isn’t something you’d like to take a chance with, take a look at MGM Mirage (MGM), down 15% since early July, or Boyd Gaming Corporation (BYD), down 20% since mid July. Boyd Gaming Corporation owns and runs 16 casinos in the U.S., while MGM operates 23 casino resorts including Bellagio, Mandalay Bay, The Mirage, Luxor, Treasure Island, New York-New York, Excalibur, and Monte Carlo. MGM also will jointly operate a casino resort in Macau with Pansy Ho Chiu-king.

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One Response to Take a Gamble on Las Vegas Sands (LVS)

  1. Adam says:

    This has to be a good investment, just look at the rooms at the Venetian…I know the hotel I’ll be staying at whenever I’m in vegas.

    http://www.4tay.com/blogs/Adam-Parker/Stay-at-The-Vanetian-in-Las-Vegas/1/1/702/

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