The Best Post-Hilton Hotel Plays
Editor's note: 'Bricks and Mortar' is a series of columns written by real estate reporter Nicholas Yulico meant to help TheStreet.com readers generate real estate and gaming-related stock ideas.
The buyout of Hilton Hotels (HLT) is a huge score for investors and sent the entire lodging sector surging Thursday.
Unfortunately, the buyout, and subsequent sector run-up, leaves few big stock-buying opportunities left in the hotel space. But there are some plays that could still win big.Readers of this column know that I've been recommending Hilton since early March. The story was simple: You could buy the stock for a multiple that was cheaper than trying to buy one actual Hilton property in Kansas. Plus, the stock offered a huge international growth platform. With Hilton on its way out, there are three lodging stocks left that investors should eye: Host Hotels (HST), Strategic Hotels (BEE) and Starwood (HOT). Today, James Altucher and Jim Cramer decided to throw in their hotel picks, too. (You can read Altucher's take from Stockpickr, and watch Cramer discuss his ideas on TheStreet.com TV.) Incidentally, both say that Wyndham (WYN) is the most likely buyout candidate. I'd caution investors who are buying Wyndham because they believe it is a cheaper version of Hilton. Wyndham has much heavier exposure to timeshares and a different overall business model than Hilton. There are better picks out there. The Hilton deal "provides what is likely the most powerful data point yet that the public lodging companies are priced at a material discount to their private market values," said a research report from John Arabia, an analyst with Green Street Advisors, an independent real estate research shop.
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