Leaving LVS Behind

I have been riding Las Vegas Sands to higher returns since I first started this blog. In fact, I've ridden it to a 55% gain over the last two months, but I think that it is time to say adieu to my beloved LVS.

Why? It will become increasingly harder for the stock to continue to outperform at current levels when earning for Q3 are announced. Two weeks ago, analysts had raised their price target to $120. It took two days for the stock to break through that amount. Today, another analyst raised his price target to $163. That would be about a double since I suggested the stock in July.

I just don't see it. When the announce Q3 earnings, it will only take a portion of the new Macau facility which opened at the end of last month. I don't care how good the numbers are, it won't be enough for those investors that are looking for the moon and stars from the stock.

With all this good news surrounding the stock, I think it is a big red flag that says, "Get out". And that is exactly what I will do. Can't argue with a 55% gain in two months time.

Quick Update & Adding a Stock Pick

So I didn't write a weekly recap last week. Sorry, busy with a trip to Indianapolis, playing Madden on the Wii and drinking. And I'm not going look back either. I'm not going to take the time to crunch the numbers. It isn't worth it. Why?

Well, because I am running away and hiding from the S&P this week. Las Vegas Sands (LVS) has broken out of it's trading range and made a significant move higher. Since the start of the week the stock is up over 16%. The move is based on an upgrade by JP Morgan analyst calling for the stock to hit $120 and giving it an "overweight" value. The stock closed today at $117.

I have also had Barrick Gold (ABX) on a nice little run. The stock has gained over 14% percent since we returned from the Labor Day Holiday. Gold has been the talk lately with so much talk of the Fed cutting rates. If rates are indeed cut, gold does move separately from the dollar. Not a bad place to be.

JP Morgan also issued an upgrade to "neutral" from "underweight" for both Transocean (RIG) and GlobalSantaFe (the company RIG is acquiring). Let's see what that does for the stock over the next couple of days.

At this time, I am going to add another stock to my portfolio. I am going to add DaVita (DVA) based on Jim Jubak recommendation here. Diabetes is something that is immune to stock price ups and downs and DaVita provides the services necessary (such as dialysis).

I think this is a great idea and I am not afraid to ride on someone else's research and know-how. I think Jim Jubak is someone you should read every Tuesday and Friday. He covers a lot of ground in his writing. Is not afraid to admit when he is wrong. And explains the most difficult ideas in easy to understand terms.

Back to Our Winning Ways

Three out of four, thus far. That is how many times my stock portfolio has outperformed the S&P since I started this blog.

What I did Get Wrong

This week was not as rocky as I thought it might be. Trading volumes were low, as they normally are this time of the year, and some M&A activity was seen with E-Trade and TD Waterhouse apparently joining forces. I was wrong on my housing information. New home sales actually posted a better than expected report, with sales actually showing a gain. But I still do not hold much weight in the numbers. We really didn't see the news of a "credit crunch" until the end of July. I don't think we will be seeing an uptrend in sales August.

What I Got Right

The S&P gained 2.3% this week. My portfolio gained just a smidge more than 3%. My big winner this week...Barrick Gold (ABX) posted a solid gain of 8.5%. Las Vegas Sands (LVS) bounced back nicely with a gain of 7.9%. And even my dog, so far, Transocean (RIG) finally put together a nice week with a gain of 4.3%. RIG's gained was based partly on the fact that Hurricane Dean missed the companies equipment in the Gulf of Mexico. It was a good week for most of my picks. In fact, I only had one loser, PepsiCo (PEP) which posted a lost this week of 1.7%. Not too bad.

Personal Note

I promise this will be the last little note that I post for a while, since this is the third in two days. I started this blog a month ago, just hoping to find a voice and maybe get some traffic. I think I have finally hit a groove with how I want my blogs to read. I never expected to be asked to write on another site, such as when Nesteggr came and asked a week into my blogging experience. Full Disclosure: Nesteggr pays for my services. I also started a third blog, Mortgage Bullet, where I am giving advice on the home buying process. It's definitely a different blog structure. Check it out too. I am very excited with my progress and look forward to continue providing content here and on my other blogs. Thanks!

Eeking Out a Win

We beat the S&P this week again but by a much smaller margin than last week. With all the turbulence in the markets right now it is amazing that the S&P ended the week with a .77% advance. It is especially amazing since the S&P's most heavily weighted sector is Financials. That sector has been in the market this week if you haven't heard.

We ended the week up 2.2%, thanks mostly to Las Vegas Sands (LVS) again. LVS gained 9.95% for the week, even though it was down over 7% Friday alone. It has been on an amazing run for the last month, so it is not surprising to see some money taken off the table.

Here is a comment about LVS made by Zach over at Nesteggr:

LVS has had quite a run - Nice pick.

I was reading their annual report the other day and stumbled onto something a bit disturbing. In 2017, the government in Macau has the right to basically begin seizing the property from LVS. There is not any recourse or payment necessary for this to take place. This is not to be an alarmist as LVS could continue to negotiate with the powers that be, and there is a lot of money to be made in the meantime, but definitely something to keep on your radar if you plan to hold the stock long-term. The Chinese government and the customs in that part of the world are very different than our westernized practices. It will be interesting to see how this story unfolds over the next several years.

I think this is an interesting item that needs to be filed away in the old memory bank but my interest in LVS is really on a time frame of 12 months. I am keeping an eye out on China's economy (not to mention our own) and look forward to what will transpire after the Chinese host the Olympics next year, hence the 12 month outlook. Once I have a feel for the economies of the two countries I will be evaluating LVS closely.

I still haven't had a good idea with small cap stocks. Small cap stocks are scary and have really been battered recently. I want to have some, probably not more than two companies, so I can have exposure to the oversized gains these companies can realize, while also limiting the risk of my overall portfolio.