Main Street Stocks

Dear Steve Jobs,

WTF, Steve. Count me unimpressed with the iPad. Not only is the name terrible but it looks like nothing better than a big iPhone.

Seriously, you couldn’t come up with something cooler than a QWERTY keyboard on an oversized iPhone in the last year? Let me take over R&D.

I’m so upset I have nothing more to say.

Sincerely yours,

The Mayor of a very sad Main Street Stocks

Disclosure: I still own AAPL but I’m less excited about it.

I need to start with a little background on the casino business for those who are new to Main Street Stocks. Gaming has proliferated around the world in recent years with the most growth taking place in Macau, China. This is the only place in China gambling is legal and has seen growth in excess of 50% in recent years. They’re much larger than Las Vegas in terms of gaming revenue, so Macau is the true driver of gaming stocks right now.

Then as the financial crisis hit all of the gaming companies struggled to stay afloat under staggering debt levels. Most were forced to re-capitalize in some way which diluted their stock but left them in a slightly less vulnerable position.

Earlier this month Macau announced that gaming revenues rose 48% in December from a year earlier. This is great news for Las Vegas Sands (LVS) in particular who has a leading market position in Macau and the most developable land on the Cotai Strip, a plot of land similar to the Las Vegas Strip. Wynn, MGM and Melco Crown also own casinos in Macau but LVS has three completed hotels with three more under construction for a dominant position.

The other exciting potential for LVS is their Singapore casino, which will open in March (hopefully). The company has estimated $1.25 billion in EBITDA for the casino and with a location in downtown Singapore I’m not going to doubt it. The right to build this casino was a highly sought after prize with Harrah’s once calling their bid their most important strategic project. For more detail including pictures (oooo, ahhhh) visit the site below to see a dated presentation from LVS.

http://files.shareholder.com/downloads/ABEA-242MDE/760170635x0x273732/a9fe3463-b8e5-465c-ad31-9930da5fa432/AC803CED-C019-46C3-A998-6FB4FF53E313_jan_09_Citi%20EMT%20FINAL.pdf

Pennsylvania also recently passed a bill to allow table games in casinos that currently have only slot machines. LVS’s Bethlehem casino should improve performance even though it may not be an impressive facility.

There are reasons I don’t like the other casino operators. MGM just opened City Center which is a huge waste of money. Wynn has developed almost all of the land they have available. Melco is intriguing but I’ll save analysis on them for another day.

Disclosure: I owns LVS and it is a considerable portion of my portfolio. But I’m not selling.

I’ve been out of commission for two weeks as I attended a seminar on sustainable development. Very interesting topics of discussion and the people and teachers of INCAE Business School in Costa Rica were very impressive. Now, on with the show.

The last two weeks have been up and down for the stock market. Positive economic data two weeks ago drove stocks higher but sketchy data has knocked it down the last couple of days.

I’m not overly concerned with the short term fluctuations of the market but the next month will be very telling for our important economic recovery. Currently far too much attention is being paid to the jobs data released on a weekly basis. What we should be concerned about is continued strong performance in earnings. Because if earnings continue to be strong hiring will soon follow.

If corporate profits were to flounder for the next six months corporations would be hesitant to hire and the recovery would take even longer. As companies like Starbuck’s and Seagate post strong numbers I’m encouraged for our economic future.

I’ve also been pleasantly surprised at the large number of job postings early in January. As the fiscal year rolls over I was hoping to see increased hiring which will help our upward spiral. I’ll keep an eye on earnings the next few weeks and give my thoughts here on Main Street Stocks.

Disclosure: Author is graduating in May with an MBA in Finance and is looking for a job.