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Should Investors Cash In Chips at Las Vegas Sands?


Neither LVS or MGM Mirage are expected to turn out stellar earnings.

Asian stocks were mixed overnight. The Hang Seng was off 0.11% and the Nikkei finished up 1.29%. European stocks were in positive territory early this morning, too. And here in the US, we're currently trading lower.

Here's what I'm focused on this beautiful Friday morning:

Las Vegas Sands (LVS)/MGM Mirage (MGM):
Both casino stocks received a nice pop in Thursday's session ahead of their respective earnings announcements, which are reportedly scheduled for next week.

Some thoughts:

1. I understand that the news out of Macau has been good lately. But I'm not excited about the space by any stretch. In fact, I continue to believe that the shares of both companies are ahead of themselves at this point, and I can't help but think that yesterday's bump up is a great chance to cash in some chips.

2. Let's not forget about Vegas folks and the challenges there, or the fact that Americans are as stingy with their money right now as can be. Plus, it's not like blockbuster earnings are expected to be coming out of these two anytime soon. My chips are squarely on the pass line.

For my last take, click here.

Philip Morris International
The cigarette giant was out with its fourth-quarter numbers. Excluding items, it put up $0.81 a share in the period, which sure was nice because the estimate I saw was $0.79.

Some thoughts:

1. While the quarter was certainly worth writing home about, I continue to like this stock even more from a long-term perspective. As I've said numerous times before, the world is only going to be a more populated place in the future, and like it or not, a good number of people will be using tobacco in some fashion, which plays right into the company's hands.

2. Note this line in the release: "Today, PMI announced the approval by the Board of Directors of a new share repurchase program of $12 billion over three years, to commence in May 2010, upon the expiry of the current, two-year, $13 billion program in April 2010. The new program is expected to be completed by the end of April 2013." I don't think this is something the company would even fathom if it thought folks were going to be stomping out cigarettes en masse or start rolling their own. This is a good sign.

For my last take on Philip Morris, click here.

Netflix (NFLX):
Justin Sharon points out this morning in his article that BMO Capital slapped a Market Perform rating on the renter of videos.

Although the shares may not get a big boost on the heels of this news -- and may actually get a bit of a smackdown in today's session as the result of broader market blues -- I continue to think that this is the clear choice in the video-rental business, bar none. That said, it's a bit pricey at 25 times the 2010 estimate, so I'm actually hoping for a bit of a pullback. In the mid to high $50s, I think the shares would be a more solid value.

Qwest Communications
SunTrust Robinson Humphrey initiated coverage with a Neutral rating.

Although the shares trade under $5 and I think it's going to have trouble garnering significant attention below that level, the earnings prospects aren't that bad. So at the end of the day, this is one I'd ponder bottom-fishing. Also note that the company has actually been pretty consistently beating out earnings estimates.

Have a great day and an even better weekend! (Don't forget Valentine's Day, fellas...)
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No positions in stocks mentioned.

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