With strong growth in Asia over the last few years and sound investment decisions that have left competitors like Wynn Resorts (NASDAQ:WYNN) and MGM Resorts (NYSE:MGM) struggling to keep up, Las Vegas Sands (NYSE:LVS) is dominating the market. That's why shares of Las Vegas Sands rose more than 4,800% from March 2009 to March 2014 to a high of above $87. However, a drop from those highs a few months ago to a current price of around $75 may prove to be a good buying opportunity for those investors who believe in the company's long-term value.
With the recent resignation of its COO, analysts have speculated on whether an even bigger change in leadership will occur at Las Vegas Sands soon, and CEO Sheldon Adelson may even look for a replacement for himself. Regardless, investors should stay confident in the company's management, especially Sheldon Adelson, who feels as bullish on his company as ever. Here's why you should consider Las Vegas Sands a strong bet just like Adelson.
Sands lost its COO, but management remains strong
President and COO Michael Leven recently decided to resign from his post at Las Vegas Sands. Mr. Leven's decision to leave Sands seems to be a personal choice, and he is doing so with goodwill and bullish comments on the company. As Mr. Leven, age 77, leaves his position, he will continue to serve on the board of directors.
Losing this particular leader is a disappointment, as Mr. Leven's short, five-year tenure as COO had proven very helpful as the company ramped up its international hotel and resort operations during that time, especially with the company's Marina Bay Sands resort in Singapore. Investors should remain confident in Las Vegas Sands' management, especially Sheldon Adelson.
Continuing to bet on Sheldon Adelson
Now, the board of directors is already preparing to recommend a replacement for Mr. Leven. However, some reports questioned whether Mr. Leven was the right person to replace CEO Sheldon Adelson, and if the search for a new COO would also be a search for a new CEO as Adelson gets closer to a normal retirement age. This is possible, but Mr. Adelson has denied this, saying that he is as bullish about his company's future prospects as ever and has no intention of stepping down, or slowing down, anytime soon. In response to this, he said:
As the supposed Mark Twain quote goes, the rumors of my demise have been greatly exaggerated. I am as bullish about this company as I've ever been, and I have no plans of slowing down or passing the CEO title or job to anyone. We have taken an important leadership position in the gaming and hospitality industry, and I plan on spending year after year building on that success. Whether it's driving financial results, working with governments to open up new markets, securing new development opportunities in emerging markets, spearheading regulatory compliance or anything else, I am intently focused on building on the momentum we have established over the past several years.
Why investors should follow Adelson in bullishness: An even bigger bet on Asia
Las Vegas Sands operates properties in Las Vegas, Pennsylvania, Singapore, Macau, and hopefully soon in South Korea and Japan. However, the Macau and Singapore operations contribute the bulk of the company's earnings, with Asian operations accounting for 88% of the company's revenue.
Compare this to a company like MGM Resorts which has not made as solid of a bet on Asia and only takes 37% of its total revenue from Asia. With less of a boost in revenue from the Asian growth market, MGM Resorts had little more than half of the first-quarter year-over-year total revenue growth that Las Vegas Sands had, as the companies reported revenue growth of 12% and 21.4%, respectively.
And now, Sands is looking to push that Asian revenue higher with a new resort coming to the Cotai strip next summer, a new integrated resort in South Korea planned for the spot of the 1988 Seoul Olympics, and finally a potential casino in Japan. Japan currently outlaws casinos, but new legislation that will allow integrated resorts in Japan shows promise for passage this autumn.
Japanese officials have looked to Singapore as a model of how they would like resorts to operate in their country. With Sands as the only U.S. company to successfully win a bid in Singapore, which Wynn Resorts tried and failed to accomplish, it has high prospects in Japan as well. Adelson has already said that he would invest whatever it takes to get a spot in Japan, in what analysts estimate could be a $40 billion industry by 2020.
Foolish last thought: Keep betting on Las Vegas Sands' management and vision
With COO Leven leaving the company, now is a great time for CEO Adelson to reconfirm his position in the company and remind investors why this company is a great bet. With its incredible 2013 and 2014 first-quarter revenue postings, its expansion in Macau and South Korea, and the potential for what could be a major win in Japan, Adelson keeps showing investors why Sands is a strong long-term play. For Foolish investors who are looking for a winning bet, this currently undervalued stock looks like a buy now.
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 may not 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.