Never Mind the Bears: Vegas Is Paying Out

NEW YORK ( TheStreet) -- I spent last week in Las Vegas for the Social Media Marketing Expo and the Trader's Expo as well as to "take the pulse" of Las Vegas again. One thing became abundantly clear: Vegas is not only back, it's attractive even compared to the peak in 2007.

America's Sin City may have surrendered the crown to Macau in terms of total revenue, but when it comes to attracting tourists from around the world, nothing else is quite the same as Las Vegas. More importantly, now is the time to invest.

Examining financials are more complicated now that Macau can make or break a quarter (or more) for many gaming companies. I've strolled the floors of the casinos in Macau, and quite simply, they are always busy. I have yet to walk the floor in Singapore, however, I've owned Las Vegas Sands (LVS) on and off for years and intend to do so again.

In 2006, there were only two places I visited where I could survey the sky and see multiple cranes in every direction. The greatest number were found in China (especially along cities on the coast). Next, with albeit not as many, came Las Vegas. Vegas didn't have building cranes at the same concentration level as, say, Shanghai, but it was as close to a building rush as seen in any U.S. city.

Construction had all but disappeared in Vegas by 2009. This lack of building cranes is the first reason Las Vegas casinos are worth another look today. First, look at the relatively concentrated ownership. Las Vegas Sands, MGM, Caesar's (CZR), Boyd Gaming (BYD) and Penn National (PENN) make up the lion's share of publicly traded casinos, especially on the strip (and in Asia). It's not easy for many investors to pull the trigger after the price appreciation some of these stocks have experienced in the last year. Since the beginning of 2013, Las Vegas Sands' stock price is up 60%, MGM's 69%, and Caesar's is an eye-popping 190%.

For me, I don't care where it's been, only where I think it's headed. Announcements by Las Vegas Sands to refinance debt under better terms should be given a lot of weight. Refinancing can demonstrate improving financial standing. Furthermore, Las Vegas Sands' and Wynn Resorts' operational income continue to improve.

LVS Income from Cont. Ops (Quarterly) Chart

Total revenue is generally moving from the bottom left to the top right of the chart. One concern is the ability from Boyd Gaming to capture greater revenue. The location visits I mentioned earlier combined with cut-rate room rates suggest off-strip locations will be the last to recover. The last few weeks have left Boyd shares lower by about 35%.

BYD Revenue (Per Share Quarterly) Chart

The Boyd gaming area outside the VIP section was modestly busy this week, occupied by either one person or no one each time I walked past to do a count (several times a day). Customer service was excellent, as good as any more upscale restaurant on the strip I ate at. That said, the buffet was as slow as I remember during any other trip. The other casino properties were relatively busy at expected times. Even non-casino on strip restaurants displayed vigorous activity.

Anecdotally, on my recent visit, Boyd Gaming was the weakest of the pack. Overall, the space appears healthy and not subject to significant immediate supply growth. Use price retracements as buying opportunities, especially with Las Vegas Sands.

At the time of publication, Weinstein had no positions in securities mentioned.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.