Las Vegas Sands Corp. (LVS), Wynn Resorts, Limited (WYNN): Buying This Bargain on the Pullback

Competition

Wynn Resorts, Limited (NASDAQ:WYNN) is the owner and operator of destination casino resorts, including Wynn Macau. Wynn Resorts, Limited (NASDAQ:WYNN) is positioned to benefit from many of the same tailwinds mentioned above, including increasing accessibility to Macau alongside income growth. However, over the last few years, the company’s market share within Macau has slipped due to rising competition from Las Vegas Sands Corp. (NYSE:LVS).

In 2008, its market share stood at 15.9%, but declined to 10.8% last year. A 5% drop is huge when you remember the masses of money coming through this tiny island. The company trades at a slight premium to Las Vegas Sands Corp. (NYSE:LVS) when it comes to forward earnings valuations, at 19.51 times. However, the company does carry a slightly higher dividend yield above 3%.

I always like to include an exchange traded fund option for those investors whom may be looking to easily diversify in volatile sectors. In this case, you would want to check out the Market Vectors Gaming (ETF) (NYSEARCA:BJK). The Gaming Index offers investors broad exposure to the gaming sector and provides significant exposure to Macau specifically.

The funds top holdings include Las Vegas Sands, Sands China, Wynn, and MGM, all of which have strong assets in Macau. Moreover, the fund has 46 holdings in total, which are required to generate greater than 50% of their revenue from gaming for inclusion in the fund. The diversification does come with a price, investors must pay 0.65% in net expense fees. These fees aren’t overwhelming if you consider the 1.32% 30-day SEC dividend yield and the commissions saved by using an exchange traded fund for diversification.

I would use any weakness as a result of the most recent quarter to pick up some shares of Las Vegas Sands cheaply. The company trades at only 19 times next year’s earnings, it seems like a bargain considering the company is taking market share in an industry growing at over 20%. Long-term growth in Macau seems likely as a result of rising incomes, high employment, a culture supportive of gaming, and increased accessibility.

The article Buying This Bargain on the Pullback originally appeared on Fool.com is written by Nathaniel Matherson.

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