Macau Skyline

The Macau skyline gets bigger and brighter each year. Photo:

Macau continues to explode, bringing big profits for companies like Las Vegas Sands (NYSE:LVS). Despite reports that April visitation is lower than expected, the number of visitors to the island has already outpaced that of 2013, and revenues continue to climb. New casino resorts and better transportation are just two reasons investors should be bullish on the gaming industry's continued growth on Macau.

Las Vegas Sands is a great U.S. play for a company that is aggressively expanding in Macau and benefiting from the trends that are driving growth there, like the increasing number of mass-market gamers coming to Macau. However, for investors looking for a potentially undervalued play, local gaming company Melco Crown (NASDAQ:MPEL) may be that company. Analysts at Deutsche Bank, Citigroup, and The Street agree that Melco Crown has very good prospects to continue growing and expanding profits in 2014 and beyond, possibly the best in Macau.

Melco Crown Logo

Photo: Melco Crown.

A pure play on Asian gaming, with plenty of profits to back it up
Of the four big names in Macau, Melco Crown is the only non-American company. With its roots in Hong Kong, Melco Crown is a local option that is solely focused on Asia without being bogged down in the lagging Las Vegas market.

The company has been able to gain big on its Macau operations. Revenue in the fourth quarter of 2013 rose 26% over the same quarter a year prior, higher than the industry total of 19%. Net income for the company during the same quarter more than doubled year over year, from $107.98 million to $223.25 million.

Citigroup analysts have touted Melco Crown as the Macau growth stock of 2014. With what the Citigroup and Deutsche Bank analysts both call the "best situated" resort on the Cotai strip, Melco Crown is set to see a jump in profits when its Studio City casino opens next year. The new casino is set to open in summer 2015 and is located directly across the Lotus Bridge, which links Macau to nearby Hengqin Island, the so-called "Orlando of China."

Adelson Via Bloomberg

Sheldon Adelson said Las Vegas Sands will pay $10 billion to open a casino resort in Japan. Photo: Bloomberg.

A potential bet on a win in Japan
While casinos are currently outlawed in the country, many analysts estimate that Japan will be the second-largest gambling market in the world. The government will vote on legislation in the coming months that will decide whether or not casinos will be allowed to begin building in Japan, and the general sentiment is that the bill will pass without a hassle.

Las Vegas Sands made headlines when CEO Sheldon Adelson said he would pay as much as $10 billion to open a casino resort in Japan. However, Melco Crown may be the under-appreciated leader in a bid for this new market. One issue that might sway the government, and could determine which company wins a bid to build in Japan, is which company can add to the value of Japan's tourism industry for more than gaming.

Melco Crown is a good bet on a company that can deliver an integrated resort that offers family entertainment beyond gaming to the Japanese people. World-class and innovative entertainment is a competitive advantage of for Melco Crown. It's City of Dreams resort in Macau includes world-renowned live acrobatic and dance shows, such as the House of Dancing Water, which an analyst at Barron's says "is a well known and respected brand and has given MPEL some brand equity in Japan." As a company that can prove itself as a family friendly integrated resort, one that boosts the tourism appeal of Japan, Melco Crown is sure to grab the Japanese officials' attention.

Recent price drops could be an opportunity for investors who want in
These strong revenue increases over 2013 have helped the share price to rise over 95% as of the beginning of March. However, recent market drops have lowered that gain to near 61%, potentially a chance for investors who want to get in to what should be more growth in the coming years.

Melco Crown
The stock has dropped from highs of $45 recently, a chance for investors who want to buy in. Source: Yahoo! Finance.

The current price in the mid- to high $30's, even at a price-to-earnings multiple of 33, is still a bargain when compared with Deutsche Bank's price target of $55.

Foolish takeaway
Shares of Melco Crown may not look cheap at a price-to-earnings multiple of 33, but consider that Las Vegas Sands shares were at the same level only a couple of years ago before those shares shot up to highs in the $80's following incredible growth and profits in Macau. While I am certainly bullish on Las Vegas Sands, Melco Crown may be the Asian pure-play growth stock of the next few years. Based on the strength of its growing revenue, its high anticipated new casino Studio City, and its opportunities in Japan, I am bullish on Melco Crown's continued growth.

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Bradley Seth McNew owns shares of Las Vegas Sands. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.