Wednesday, March 31, 2010

Las Vegas Sands (NYSE: LVS) Looks Ready to Pop

Stocks are rarely bargains when a company is prosperous and everyone loves it. Bargains are most often found under a cloud. However one needs to be cautious while picking stocks. Though plenty of stocks look cheap right now, not all of them are bargains. The real bargain is when a stock price is low relative to the future growth of the business. If business is fueled by irreversible global forces - that makes it a great investment.

Las Vega Sands requires little introduction. The company is all set to open the first phase of its Singapore casino on April 27, earlier than expected; bringing into play a project CEO Sheldon Adelson says will generate $1 billion in annual profits. The $5.5 billion Marina Bay Sands casino will start operating along with 963 hotel rooms, part of the shopping mall and convention center, and several dining outlets. The Marina Bay Sands occupies a waterfront site at the edge of Singapore's central business district, and was the more fiercely contested license when Singapore gave the green light to casinos in 2005 in a bid to attract more tourists.

Singapore opening date comes at a time when most Las Vegas casino operators are struggling amid falling room rates. Moreover, there are concerns that MGM's CityCenter, which opened late last year, will add to an overall room glut in Las Vegas. Las Vegas Sands said the Singapore casino's official opening is scheduled for June 23 when the firm expects to open more retail and dining outlets along with the nightlife offerings.

Inspired by Macau’s emergence as the Las Vegas of the Far East, Singapore is working hard turn to portray itself as an Asian playground for the rich. The country, which legalized casino gambling in 2005, sees casinos as an important part of a broader effort to promote itself as a getaway for tourists. The city-state is aiming to increase the number of annual visitors from 9.7 million last year to 17 million by 2015.

LVS has huge ambitions for the development, which is one of the world’s most impressive gaming facilities in a rapidly-growing market. It is likely to benefit from an explosive growth in visitor arrivals in the Asian city-state. According to Singapore Tourism Board, visitor arrivals to Singapore may rise by as much as 30 percent this year, helped by an economic recovery in Asia. In February, visitor arrivals in Singapore rose 24 percent from a year earlier to reach 857,000, the highest ever for the month. This makes it the third month in a row Singapore has seen record visitor arrivals, an indication that the tourism industry is in better shape than ever. Hotel occupancy rose 4.9 percentage points from a year ago to 79.7 percent. The number of "visitor days" -- the overall visitor arrivals times an average length of stay for each visitor -- grew 16.3 percent in February from a year earlier to 3.3 million days.

Meanwhile, the company has been doing well in Macau-another Asian casino hub. Gambling revenue in Macau rose about 70% in February from a year earlier to 13.4 billion patacas ($1.68 billion), according to reports citing the Portuguese-language media group Lusa News Agency. Last year, gross revenue at Macau's casinos jumped 10 percent to a record of more than 119 billion patacas ($14.9 billion) in 2009, government data.

There are also signs of improvement in Las Vegas market, though it's still too early to determine whether it will lead to a full blown recovery. Las Vegas visitor volume climbed 4 percent in January, the fifth straight year-over-year monthly increase in tourism numbers. Still, while bookings have gone up, prices have fallen substantially than they were couple of years back.

LVS stock has been steadily recovering. Shares of LVS are currently trading for $21.21 a share, and are up almost 39% so far this year. The technicals look great for the stock. As far as sentiment on the Wall Street is concerned, eleven of the 18 analysts covering the company have it rated as a Strong Buy. Of the remaining seven analysts, five are at Hold, and two rate it at Moderate Sell.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire