A long, long time ago, on September 3, 2007, I created a watch list in my Ameritrade account which I named the JWB50.  I picked 50 stocks (the maximum number you could have on a watch list) and 'invested' roughly $1000 in each.  Since this time I have had to replace a few stocks on it, but it is largely the same now as then.

As a result this has allowed me to compare each stock against its value at a prior moment of time.  This would only be so valuable if I hadn't chosen what seems like a very useful point in time.  In 2007, this was after a summer slump, then a little run-up, before things went parabolic or hit the skids.  It was a time of great confidence, but not over-confidence.

What I try to do when I look at it now is look for a narrative, from prior peak (what we'll call prior peak here) to its bottoming out in the March 2009 timeframe, to its recovery through now.  The strongest companies, the ones earning money now and with great expectations for the future, are way higher than they were in Sep. 2007.  The best performer on that list has been Netflix (2nd, Tivo, 3rd, SourceFire) and for the winners, it tells a story of a continuing move up, with just a breather for the financial crisis/recession.  

But there is some value in looking at the bottom of the list, too.  The stocks which have lost the most value since the prior peak.  Not to say all of those are buys.  Citibank is the lowest in current value, and I think that's a whole can of worms I will leave for others to discuss.  2nd to last, ESLR (Evergreen Solar) which is rightfully very cheap.  But 3rd to last, somewhat surprisingly, given what an amazing recent run it's had, is LVS.  Compared to my (artificial) prior peak, a market value of only $271 (compared to roughly $1000 initially).

What this reflects is that they have been getting their asses handed to them in terms of earnings for the last couple years.  But I think what the recent run-up reflects is the realization that as they have bet big, they will reap the rewards big when the economy fully recovers.  (Keeping in mind with their heavy Macao presence, we're talking the global economy including China as well.)

I've stated before I don't see this company regaining its lofty peak $80 - $100 per share valuation.  I mean never say never, but in the foreseeable future, no.  But could it regain $50?  I would say yes.  

Another thing I look at a lot is branding.  Some might say Wynn is a better Vegas/Macao play (look at their earnings) but I think the Venetian/Palazzo brand is at the top of the casino game. 

The fact that they took a very successful, iconic Vegas casino in the Venetian, built one halfway across the world in Macao, and made it work -- this is indicative of the brand cache that will allow them to make money hand over fist when the operating environment improves.

 

p.s.  if anyone at LVS is reading this, how about comping me a suite at the Palazzo next time I'm in Vegas?