Hotels Gain on Upgrade
Hotel stocks rallied Tuesday after Banc of America Securities upgraded Starwood Hotels (HOT), Host Marriott (HMT) and Hilton Hotels (HLT) to buy, telling investors the sector was on the verge of a second leg of a bull run.
According to analyst Jeremy Cogan, hotel stocks are due for significant upside over the next two years, driven by better-than-expected room rates, tight supplies and increasing demand for lodging. After touring more than 20 hotels in four key markets, the analyst raised his 2005 estimates for earnings per share and revenue per available room, a key industry metric also known as revpar.
"Our lodging index has now cooled a bit in 2004 -- just as lodging stocks did in 1994 -- as interest rates go higher and investors take a break to survey the future profit landscape," Cogan said. "If the cycle truly repeats, the 'second leg of the lightning bolt' -- another meaningful bull move for lodging stocks -- could be coming next
Indeed, hotel stocks have taken a breather. So far this year, the Dow Jones Hotel Index is up 16% after gaining 50% in 2003. On Tuesday, hotel stocks got a bid, thanks to Cogan's upgrade, with the Dow Hotels up 1.5%, driven by Starwood's gain of $1.28, or 2.9%, to $45.85. Host Marriott rose 37 cents, or 2.7%, to $13.96, while Hilton rose 38 cents, or 2.1%, to $18.57.The rally may have already started. Since Aug. 10, when Four Seasons (FS) easily beat Wall Street expectations and
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV