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2-Star Stocks Poised to Plunge: Las Vegas Sands

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 8:00PM

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Market-lagging returns could be written in these two stars.

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, casino operator Las Vegas Sands (NYSE:LVS) has received the distressing two-star ranking. While one-star stocks have been the worst performers, our data has shown that two-star stocks still lag the market by a significant margin and should be approached with caution. Conversely, highly rated stocks have outperformed the S&P.

With that in mind, let's take a closer look at Las Vegas Sands' business, and see what CAPS investors are saying about the stock right now.

Las Vegas Sands facts

Headquarters (founded)

Las Vegas (1988)

Market Cap

$2.13 billion

Industry

Resorts & Casinos

TTM Revenue

$4.35 billion

Management

CEO Sheldon Adelson (since 2004)

COO William Weidner (since 2004)

Return on Equity (average, past four years and TTM)

10.7% and (0.6%)

Competitors

Wynn Resorts (NASDAQ:WYNN),

MGM Mirage (NYSE:MGM)

CAPS members bearish on LVS also bearish on:

Apple (NASDAQ:AAPL),

Altria (NYSE:MO)

CAPS members bullish on LVS also bullish on:

General Motors (NYSE:GM),

Centex (NYSE:CTX)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 19% of the 1,104 members who have rated Las Vegas Sands believe the stock will underperform the S&P 500 going forward. These bears include jester112358 and CAPS All-Star Option1307.

Late last month, jester112358 tapped the stock as a highly leveraged gamble:

With a debt to equity ratio of over 4:1, its hard to imagine how they will roll over their debt in a tight credit market. Also, cash flow will decrease as consumers pay for essentials other than gambling, such as cigarette smoking.

In a pitch earlier in the month, Option1307 agrees, highlighting the Sands as an obvious losing hand:

Admittedly this stock has fallen a ton already...But bankruptcy is only a few more dumb management decisions away. I don't care if this, or the market, rallies in the near term. The economy is going to be in a drastic slump for some time to come, and thus [Las Vegas Sands] has more to fall. Flights are expensive, car trips are expensive, people are broke, they are certainly not going to the good ol' Vegas anytime soon.

What do you think about Las Vegas Sands, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Apple is a Motley Fool Stock Advisor pick. The Fool's disclosure policy always gets a perfect score.

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Stocks Mentioned

Las Vegas Sands Stock Quote
Las Vegas Sands
LVS
Altria Group, Inc. Stock Quote
Altria Group, Inc.
MO
Apple Inc. Stock Quote
Apple Inc.
AAPL
General Motors Company Stock Quote
General Motors Company
GM
Wynn Resorts, Limited Stock Quote
Wynn Resorts, Limited
WYNN
MGM Resorts International Stock Quote
MGM Resorts International
MGM

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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