Stan WongLas Vegas Sands Corp.LVSCOMMENTJan 26, 2012

Hotel & casino sector will remain strong.
Travel demand will only get stronger as market recovers.
China demand also rising. 
Current share price is good time to buy.
Expecting further share price gains. 

Interesting company. Nice run since October 2022. Getting expensive. Be fairly cautious.

The sector has certainly recovered strongly, and EP in the quarter was 68% better than estimates. 
From three years of losses strong earnings are expected this year and next. 
We think the outlook is good. Our cold-water on the thesis would be (i) valuation. 
At 33X earnings, its well above historical averages in the 21X to 23X range (ii) Debt. At $10B (net) it is still more than 2X the highest annual cash flow of the past 10 years. 
Cash flow has been negative for the past three years. 
Debt increased by $4B during the pandemic years. 
We do expect this to decline with normalized earnings trends, but is a risk if results do not meet growth expectations and/or we see a recession. Overall, we would give it an 'OK' but higher risk rating. 
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Sold all US properties last year. Now a pure play on the high growth, Asian gaming market and China reopening. Leading market share. Macau is the Las Vegas of China, and gross gaming revenue is growing by triple digits. If you go into a casino enough times, you will lose money, and this means that the house will make money. Expects operating profit to grow by 600% this year. Reports tonight. May regain investment-grade credit rating, which could unlock the door to buybacks or reinstating the dividend. No dividend.

The consumer still wants experiences, and China is reopening. Macau too.

He prefers Wynn Resorts (very well-run), but both will benefit from a Biden presidency and warmer US relations with China.

He's bullish gaming stocks, but they're erratic. Now, it's at a good level. Buy it here.

Been a longer uptrend since 2016, but has broken down recently. If it bounces back, that's encouraging, but this stock is moving in the opposite direction of the overall market which is a serious worry. He'd take a little money off the table
here.

(A Top Pick February 12/18 - Up 10.4%.) This is what he likes to see. He likes the gaming sector. Continues to like it.

It mirrors Wynne with a similar run. He likes the gaming space. Chart looks great with slow, "staircase" movement, recent pullback and now renewed interest. There's only upside. (Anaysts' price target $80.79)

The results are inconsistent in that industry. It is probably okay for now. Return on invested capital has come down from 17% to 11. The yield is not as sustainable as some utilities are.