A Star with Starwood Hotels & Resorts Worldwide
Looking at just the economic situation which presents itself during this type of year is almost a perfect condition relative to what Starwood desires. Not only is it the time of year when many hotels are active, but because Starwood has a global presence in countries such as the Bahamas and Mexico, with the depreciating dollar there should be much rejoice for shareholders of this company. When a depreciated dollar is put against other currencies such at the peso, more Americans are going to be willing to convert their money to the peso, allowing for a higher margin of profit relative to just a normal situation. As that happens, sentiment may improve for these currency exchangers and more money may be placed in more luxury hotels such as ones which Starwood owns. Thus the coupled effect of the holiday season and the depreciating dollar makes a truly optimistic situation for what Starwood may see and reap in the future.
As I say such a statement, many of you, as investors, may argue that all luxury hotels such as Starwood should receive the same accolades and praise, especially if they are located in foreign markets. True to an extent, what Starwood provides that other companies do not can be understood on the basis of fundamentals. With solid revenue, gross profit, and operating income margin growth over the last three years relative to its income statement, and a nice 6% increase of net income over the last year relative to the cash piling in, Starwood has solid fundamentals which should not be frowned upon. There may be some questions regarding a below one current ratio for this year, but, in terms of the long run, Starwood has seen growth relative to its total assets and a decrease in growth relative to its total liabilities which should be beneficial to long shareholders. The real celebration point can be found with Starwood's P/E ratio.
Standing below a near amazing number of about 15, none of its competitors such as Choice Hotels, Hilton, or Marriot comes close. It's true that Starwood has a forward ratio of around 26 which is now comparable to its rivals, but there is still money to be earned regarding the current price. What also makes Starwood interesting is that out of the three competitors I mentioned all of them have a lower share price value than this hotel chain. Such may make an investor wary when thinking of buying shares, but even with a share price that high, you would have to double the P/E ratio of Starwood to come across these other company's number. Some may say that Starwood is an old company to try and find some kind of loophole, but if you make a comparable chart of Starwood versus Hilton for example, you would see that Hilton, an IPO in 1983 still produces figures much lower than the Starwood enterprise which subsequently was an IPO in 1988. Thus, after looking at the fundamentals and competition, in terms of these criterions, Starwood looks pretty appealing.
Moving on to technical analysis, an investor may soon realize that there is no real trend that he or she can follow compared to a Goldman Sachs for example. Nevertheless, I have found a few areas which should be supportive of my claim to label Starwood as a strong buy. Over the past two years it becomes noticeable that Starwood appears to have some kind of up and down cycle with a relevant resistance level of about 64 and a support level of near 52. However, over the past three months Starwood has grown in terms of share price from 54 to 65. Previously, the share price would rise for two months to its resistance level then fall back the next two months to its support level. Such a trend has seemed to have diminished as a trend of about three months, using a 50 day average level, indicates that the share price has grown a significant amount and intends to surpass its resistance level in favor of a strong rally. More evidence to support such a claim can be found with volume research, illustrating that a lot of investors, even during times of pessimism, are not selling their shares.
For example, during the vicious share price drop in April of 2006, volume for that day was actually relatively normal. The same can be said about the drop in mid June. However, during September when Starwood experienced a spike in terms of share price, volume for that day was over and above the volume for the noted losses, signaling that a lot of institutions are still bullish on this company. In addition to that, the day with this most volume over the past year, October 26th, the day the company reported quarterly earnings, illustrated, even with some pessimism only a slight drop in its share price. As such happened, the market seemed to ignore or take positives from the news and continued to have a strong influence on the rally of this company. Thus through such analysis, much can be said that while the technical aspects are not 100% concrete, there are still some positive factors to look at regarding this company when deciding about your next purchase.
Overall because of the holiday season and depreciating dollar with the global presence, strong fundamentals relative to its competitors, and some interesting findings related to the technical part of research, Starwood earns my approval as a company I would label as a strong buy. It's true the United States economy is slowing down relative to the rest of the world, but the rest of the world still means a lot of profit for companies like Starwood to be earned.
Related Tags: hotels, technical analysis, dennis biray, hot, starwood, hilton, marriot, choice hotels
Dennis Biray presents advice on all kinds of topics ranging from finance and investing to fitness to sports. For more information email him at dbiray@gmail.com, or to view other articles written by him visit http://www.biraynetworks.co.nr
Your Article Search Directory : Find in ArticlesRecent articles in this category:
- Free Online Stock Market Software
It can be quite tough to find good stock market software there are just so many options out there to - Few Essential Commodities That Are Traded
Segregating commodities into different types makes it easier for traders and investors to compare pr - Ecn Trading
First of all, Market Maker Broker.Market maker broker is a company authorized to create and maintain - Stock Market Wisdom-learning To Trade Like The Legends, Part 7
Top traders and investors know the most money will be made by following the main trend. Jumping in a - Stock Chart Analysis And Understanding Trend Lines
Nearly all practiced equity market participants understand trends in the stock market offer the very - Three Tips For Picking Out The Best Value Investing Software
Value investing software can turn a first time clueless trader into a success in the stock market wi - Market News Giving Shape To Investment Goals
Do you think market news can help you take the right trading decisions? It is an obvious 'Yes'. If y - Stock Market Investing Without Emotion
Investing in the stock market is so tricky, and an emotionally driven decision to most people, that - How To Spot And Select The Best Automated Trading Stocks Program
Easily the greatest deterrents which keep potential traders out of the stock market is the risk asso - Why Are Millions Of Traders Using Online Stock Trading Programs?
Online stock trading programs are those which deliver profitable and winning stock picks right to yo
Most viewed articles in this category:
- Trading Secrets of a Successful Share Trader
The first and most important thing a trader must have is a "TRADING PLAN"This is a "Written PLAN" wh - Beat the Market
Beat the Market! Can it really be done? Consistently?As unlikely as it may seem, hedge fund manager - How To Find Potential Profitable Stocks
There first thing is knowing where to look. It is quite amazing sometimes where a tip or information - Commodities Trading Online
With the advancement of the internet, commodities trading online is now made possible. Commodities t - Beating the Dow with Bonds!
Beating the Dow with Bonds, is 1/3 of an extremely successful asset allocation strategy outlined i - Kennametal be such a great Buy?
From many of my previous articles I have focused more on companies I would consider buys in the shor - Minority Shareholder Squeeze Out
For those that have been a victim of a minority shareholder squeeze out, the experience can be a nig - Beta - Analyzing The Risk Profile Of Stocks
Who would not like to have an exact risk positioning outlined in front before taking any decision? W - Penny Stock Picks: The Promises And Pitfalls
When trading any security you really need to do your homework. If you do not, and the price per shar - 4 Main Risks Involved in Futures Trading
There's no doubt that futures trading is inherently a risky business. Anyone who tells you it is 100