Las Vegas Sands (NYSE:LVS) appeared on my bearish scan last night and there were several things that stood out about the stock. On the daily Las Vegas Sands stock chart we see the company is struggling to move back above its 50-day moving average. The trendline has served as support and resistance in the past and appears to be acting as resistance right now.
The overbought status with a bearish crossover of the stochastic readings has been a pretty good indicator of small pullbacks in the past and that could be the case again now, but I think there could be more to it this time around.
Looking at the weekly chart we see the potential head and shoulders pattern being formed with the right shoulder forming right now. This would indicate a return trip down to the $70 range in the coming weeks and then a continued slide down to the 52-week moving average is a definite possibility.
Las Vegas Sands stock has been doing well on the fundamental front. The company has averaged EPS growth of 24% over the last three years and they have seen EPS growth for four straight years. The more recent EPS growth is even more impressive as the company as averaged 49% for the last three quarters. Sales growth has been impressive as well with an average of 22% over the last three years. If there is a concern with LVS’s financials, it is the debt to equity ratio of 122%.
Given the technical performance over the past few years and the fundamentally sound situation with LVS, it isn’t surprising to see an optimistic outlook from the sentiment indicators. The short interest ratio is below one and 19 of 23 analysts have the stock rated as a “buy” with the other four rating it a “hold”. The only sentiment indicator that even hints at some sense of pessimism is the put/call ratio which is at a percentile reading of 67. This puts the sentiment composite reading at 5.99 which is a little on the low side for my liking.
While I don’t like the overly optimistic sentiment readings, it is hard to argue with the company’s fundamental performance and the price performance over the last few years. I wouldn’t mind owning shares of LVS, but I would wait until the stock dips down to the $70 range before committing money to it. Hopefully the sentiment will become a little less optimistic as the stock falls. If that happens, my conviction about a bullish trade will become much higher.
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