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Luxury Hotel Goes on an Expansion Spree

12/24/2019 5:00 am EST

Focus: REAL ESTATE

Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

The “Santa Claus” rally is in full bloom, thanks to low interest rates, a booming economy and positive news about the trade negotiations with China. observes Mark Skousen, editor of Five Star Trader.

Hyatt Hotels Corp Corporation (H), the Chicago-based chain of nearly 800 hotels, resorts and vacation destinations in 54 countries, is a new recommendation that appeared on our radar screen,

Hyatt primarily serves corporations and associations, travel agencies and high-net-worth individuals. Hyatt Regency is its most famous brand.

To maintain its competition with Marriott and Hilton, Hyatt is on an expansion spree, and in celebration of its 40th anniversary, plans to open an additional 20 luxury hotels in 2020 around the world, with special emphasis on Asia.

Hyatt’s Chief Commercial Officer Mark Vondrasek stated, “We’re excited to expand into new markets and enhance the global footprint of our brands, giving our guests and members additional ways to connect with our luxury offerings in places where they want to be.”

With profit margins exceeding 19%, earnings grew 25% in the most recent year to $489 million on $2.55 billion in revenues. The company has $800 million in cash, which is plenty to handle its $2.1 billion in debt.

The stock has a modest rising dividend policy, and it should raise its quarterly dividend again this year. Hyatt has beaten Street forecasts four quarters in a row, and I expect it will do so again when it reports in February. Let’s buy Hyatt Hotels Corporation at market and place a protective stop of $69 a share here. 

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