Monday, June 14, 2010

A King Among Casinos

By Eric Jackson
RealMoney Contributor

6/14/2010 5:00 PM EDT
Click here for more stories by Eric Jackson

It's been a rough two months in the market, starting with the surprising SEC charges against Goldman Sachs (GS - commentary - Trade Now), followed by Europe's sovereign-debt woes and the flash crash. Some feared a second financial collapse, until the European Union announced its $1 trillion rescue plan. Then concerns ran amok about a European slowdown that could derail China's economy.

With all this happening, Las Vegas Sands(LVS - commentary - Trade Now) should be sunk into the lows of the year. It's got heavy debt, major exposure to China through its Macau properties, and its U.S. operations are still incredibly weak .

Yet, LVS is up 72% year to date, compared with the S&P 500's 2% decline. It is also outperforming peers with a bigger presence in Macau, such as Wynn Resorts (WYNN -commentary - Trade Now), up 42% for the year, and MGM Mirage (MGM - commentary - Trade Now), up 27% for the year. Even against a smaller U.S. regional player such as Boyd Gaming (BYD - commentary - Trade Now), which has regained a healthy 31% of its stock price this year, LVS is still way ahead.

What's even more remarkable, these healthy gains didn't come in January, followed by a sharp retracement since Europe's troubles began. The stock's gains held up, and even increased through the past six weeks.

Consider Royal Carribbean (RCL - commentary - Trade Now), the ultimate consumer-discretionary purchase. During the "melt up" from January through April, the cruise-ship operator, along with many other retailers and discretionary names, benefited. Its stock gained more than 40%. Then came Goldman, Greece, the flash crash and China worries. Suddenly, investors recalled RCL's heavy debt burden -- $6 billion market capitalization and long-term debt exceeding $8 billion. If RCL were a country, it would be one of the PIIGS (Portugal, Ireland, Italy, Greece and Spain). In fact, RCL has been battered these past six weeks, although it remains up 12% for the year, still good by S&P standards.


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