Up almost 10.6 percent over the past week, Las Vegas Sands (NYSE:LVS) stock is attempting to shed its laggard status. At least one investor believes the gaming company’s recent strength will continue.
In midday trading, Sands shares are slightly lower. But that comes after the largest casino operator by market value rallied 17.27 percent off its 52-week low. Amid strength in the broader gaming equity complex, Quint Tatro, president of Joule Financial, sees reasons to be bullish on LVS.
The easy play is Las Vegas Sands,” Tatro said in a CNBC interview. “It was March of just this year we were on here speaking about their abrupt shift and their sale of all their Las Vegas properties to basically double down and focus on their Asia exposure. At the time, I think it was a big question mark.”
In March, LVS announced the $6.25 billion sale of its Sin City assets — the Venetian, Palazzo and Sands Expo and Convention Center — to Apollo Global Management (NYSE:APO) and VICI Properties (NYSE:VICI). That eliminated the company’s US exposure, at least for the time being, putting more emphasis on its Macau and Singapore operations.
For LVS Stock, All About Macau
Much of the recent bullishness in shares of Sands is sourced from Macau, where the operator controls five integrated resorts.
The special administrative region (SAR) is easing some travel restrictions after an uptick of coronavirus cases in mainland China made new restrictions necessary. On Monday, authorities in Macau said visitors from Guangdong province can enter the gaming hub with a negative COVID-19 nucleic acid test that’s seven days old. The previous requirement was a negative test of no more than 48 hours old.
Earlier today, officials in Guangdong eased travel controls for outgoing travelers, as the number of regions in mainland China classified as “medium” or “high” risk coronavirus hot spots is declining. That’s relevant to Macau and its six casino concessionaires, including Sands, because the gaming center doesn’t have a quarantine policy for visitors from mainland China as long they hail from a region deemed to be low risk.
Strength in Macau is essential to the LVS stock thesis. It’s the largest operator there and its only other venue is Marina Bay Sands in Singapore — another tourism-driven region that’s being hampered by the COVID-19 pandemic.
Assessing Rebound Legitimacy
Following a multi-month slide caused by the emergence of the delta variant and concerns about the evaporation of government stimulus cash, among other factors, gaming stocks are finding a groove again. If that resurgence is long-lasting, LVS could continue responding.
“If this [rebound] is legit and we start to see a resurgence in the casino space, I think Las Vegas Sands is the play here,” Tatro told CNBC.
A credible bounce back in LVS stock, which may already be materializing, could rid the name of its status as one of the few S&P 500 members to not post gains off the March 23, 2020 market bottom. Since then, the benchmark equity gauge doubled.
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