Value at Marriott Vacations?

10/12/2015 8:00 am EST


Tyler Laundon

Editor, Cabot Small-Cap Confidential

When I think of game changing companies, timeshare management and resort property firms are not usually included in that list, suggests Tyler Laundon, editor of Game Changers.

Nevertheless, we’re adding Marriott Vacations Worldwide (VAC)—a little-known timeshare and resort management company—to our model portfolio.

In this tough market we wanted to bring you a company that is taking a different approach to a pretty boring and traditional industry.

It's a stock that we think offers us a great entry point as well as strong growth opportunities and catalysts.

Marriott Vacations Worldwide is the result of Marriott International (MAR) spinning off its timeshare business in late 2011.

With this in mind, Marriott Vacations Worldwide is not the same as Marriott even though the spin-off benefits from the broad brand awareness.

The company markets and manages timeshare and vacation properties in the United States, the Caribbean, Europe, and Thailand.

As luxury consumers and the general public increase their vacation spending, and economies generally strengthen, it makes sense that the company is seeing strong results across its lines of business.

Since it started trading independently of Marriott International, VAC has logged a gain of more than 275%.

The stock began falling in July and broke through multi-year support in August, dragged lower by market turmoil elsewhere.

As a result of this decline, the stock is now trading at valuations not seen in its nearly four years of trading.

The only information I can tie to its decline is an S-8, in which the company disclosed the issuance of 500,000 shares for its employee stock purchase program.

This represents only a 1.6% increase in the total share count. For this to kick off a 28% decline in the stock’s price seems like an opportunity for us to pick up shares on the cheap.

With the stock trading at all time low valuations and sitting right at a base of support, this looks like an excellent entry point for us to add shares of Marriott Vacations Worldwide to the Game Changers portfolio.

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