Las Vegas Sands Corp. (LVS), Wynn Resorts, Limited (WYNN): Should You Play This Dangerous Game?

Betting on Las Vegas
Las Vegas Sands has exposure to Las Vegas, but not nearly at the level of MGM Resorts International (NYSE:MGM), which operates approximately 30% of the rooms on the strip.

If you want to bet on Las Vegas, then you can do so through MGM Resorts International (NYSE:MGM) but this probably wouldn’t be a good idea. The middle-income consumer has weakened due to lower wage growth, increased payroll taxes, and higher gas prices. At the same time, the high-end consumer might be completing its celebration at some point over the next year. The high-end consumer has done well partially in thanks to stock and real estate appreciation.

But with the potential of a Fed taper and rising interest rates, in addition to the cooling of the housing market, an upcoming debt ceiling debate, and a change to the Federal Reserve chairman, a lot is up in the air at the moment. We might not be at the top, but we’re certainly much closer to the top than the bottom. This, in turn, doesn’t bode well for Las Vegas casino resorts since discretionary income is likely to decline, not increase in the near future.

Conclusion
Mr. Market is capable of anything, but if you look at the Las Vegas Sands story from a logical perspective, then you’re essentially betting on continued growth in Macau without that growth being affected by a likely economic slowdown in the United States. Perhaps I’m wrong, but to me, this isn’t a bet worth making at the current time.

The article Should You Play This Dangerous Game? originally appeared on Fool.com.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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