Bricks and Mortar: Check Into Hilton Hotels

Hilton will surely experience some issues if the global economy weakens sharply. But relative to other real estate stocks, Hilton is doing so many good things that buying it now for the long term is a solid idea.

Updates: Ryland, Penn, Brookfield

The latest homebuilder news has brought more negatives into the sector's mix. Over the past two weeks, Toll Brothers(TOL) said the housing market deteriorated in February, Hovnanian(HOV) announced more large writedowns and January new-home sales data from the government were very disappointing.

All this has helped fuel a selloff in homebuilder stocks. My opinion on Ryland is based on relative overvaluation. At the time of my original column, Ryland traded at the highest price-to-book metric in the industry (1.62 times) because investors felt the company would not be subject to as many land impairments.

After the selloff, Ryland now trades at 1.36 times book value, which is still high -- tied with Lennar(LEN) but lower than KB Home's(KBH) 1.51 level (the highest among big builders).

When the volatility settles down in the broader stock market, I expect builders will continue their slide, with Ryland remaining among the losers.

I'm still bullish on Penn National(PENN), which remains an attractively valued casino operator for reasons I laid out in a previous column.

I also continue to like Brookfield Properties(BPO) and the StreetTracks Dow Jones Wilshire International Real Estate ETF(RWX), but I remain bearish on Trump Entertainment(TRMP).

For more about why I like and dislike these names, see my first Bricks and Mortar column, published in late January.

Bricks and Mortar Portfolio
	rating date	price at rating	rating	current price*	return
Brookfield	1/23/2007	$43.00	Own	$42.94	-0.1%
Global R.E. ETF	1/23/2007	$64.00	Own	$63.90	-0.2%
Ryland	1/23/2007	$56.00	Flag	$47.45	15.3%**
Trump	1/23/2007	$17.50	Flag	$16.71	4.5%**
Penn National	2/6/2007	$45.56	Own	$45.66	0.2%
Hilton	3/1/2007	$34.69	Own	$34.69	0.0%
*(3/2/07 closing price)
**While the stock is down since the initial rating, it is tracked as a positive return for the portfolio, since the stock was "flagged."

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