Trade-Ideas: Summit Hotel Properties (INN) Is Today's Strong And Under The Radar Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Summit Hotel Properties ( INN) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Summit Hotel Properties as such a stock due to the following factors:

  • INN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.4 million.
  • INN is making at least a new 3-day high.
  • INN has a PE ratio of 108.6.
  • INN is mentioned 1.10 times per day on StockTwits.
  • INN has not yet been mentioned on StockTwits today.
  • INN is currently in the upper 20% of its 1-year range.
  • INN is in the upper 35% of its 20-day range.
  • INN is in the upper 45% of its 5-day range.
  • INN is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on INN:

Summit Hotel Properties, LLC engages in the development, ownership, operation, and management of hotel properties in the United States. As of December 31, 2009, it owned and operated 42 mid-scale without food and beverage hotels and 23 upscale hotels in 19 states. The stock currently has a dividend yield of 3.6%. INN has a PE ratio of 108.6. Currently there are 6 analysts that rate Summit Hotel Properties a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Summit Hotel Properties has been 727,900 shares per day over the past 30 days. Summit Hotel has a market cap of $1.1 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.57 and a short float of 1.6% with 3.30 days to cover. Shares are up 4.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Summit Hotel Properties as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 27.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SUMMIT HOTEL PROPERTIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SUMMIT HOTEL PROPERTIES INC turned its bottom line around by earning $0.05 versus -$0.09 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.05).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 351.5% when compared to the same quarter one year prior, rising from -$1.88 million to $4.73 million.
  • Powered by its strong earnings growth of 111.11% and other important driving factors, this stock has surged by 45.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SUMMIT HOTEL PROPERTIES INC's return on equity significantly trails that of both the industry average and the S&P 500.

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