In this article, we discuss the 5 best hotel stocks to buy now. If you want our detailed analysis of the hotel industry, go directly to the 10 Best Hotel Stocks To Buy Now.
05. Las Vegas Sands Corp. (NYSE:LVS)
Number of Hedge Fund Holders as of Q2, 2022: 42
Las Vegas Sands Corp. (NYSE:LVS) was founded in 1988 and is based in Las Vegas, Nevada. Las Vegas Sands Corp. (NYSE:LVS), together with its subsidiaries, develops, owns, and operates integrated resorts in Asia and the United States.
On September 26, investment advisory Jefferies upgraded Las Vegas Sands Corps. (NASDAQ:LVS) stock to Buy from Hold with a price target of $50, up from $40. Analyst David Katz issued the rating update.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Citadel Investment Group is a leading shareholder in Las Vegas Sands Corp. (NYSE:LVS), with 4.1 million shares worth more than $138.6 million.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Las Vegas Sands Corp. (NYSE:LVS) was one of them. Here is what the fund said:
“Certain travel-related businesses remain cyclically depressed not secularly challenged and should rebound as economic strength re-emerges. For example, the business operations of Macau-centric casino and gaming companies such as Las Vegas Sands Corporation (NYSE:LVS) have yet to recover due to the ongoing COVID-19 challenges in China. We expect business to rebound sharply when economic growth recovers just as it did in Las Vegas. Las Vegas Sands Corporationis a global leader in the development and operation of luxury casino resorts in Macau and Singapore, and it maintains a liquid and investment grade balance sheet. It is currently valued at a significant discount to our assessment of replacement cost, and the company’s Macau operations are valued at only 7 times estimated cash flow.”
04. MGM Resorts International (NYSE:MGM)
Number of Hedge Fund Holders as of Q2, 2022: 46
MGM Resorts International (NYSE:MGM) was incorporated in 1986 and is based in Las Vegas, Nevada. MGM Resorts International (NYSE:MGM), through its subsidiaries, owns and operates casino, hotel, and entertainment resorts in the United States and Macau. MGM Resorts International (NYSE:MGM) was able to repurchase 8% of its outstanding shares in Q2 2022 thanks to normalized FCF.
On September 26, Citi analyst George Choi maintained a Buy rating on MGM Resorts International (NASDAQ:MGM) stock and raised the price target to $58.50 from $58, citing the resumption of Macau-bound e-Visas in late October and early November as a positive surprise. At the end of the second quarter of 2022, 46 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in MGM Resorts International (NYSE:MGM), compared to 59 in the preceding quarter worth $2.18 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks, and MGM Resorts International (NYSE:MGM) was one of them. Here is what the fund said:
“MGM Resorts International (NYSE:MGM) is a leading global casino and entertainment company. At its recent price of only $30 per share, we believe MGM is valued at a significant discount to our reasonable $50 per share estimate of the sum-of-the-parts value of its business. Further, the company’s domestic operations are valued at a 18% free-cash-flow yield. Paul Salem, Chairman of the Board, recently acquired shares.”
03. Marriott International, Inc. (NASDAQ:MAR)
Number of Hedge Fund Holders as of Q2, 2022: 46
Marriott International, Inc. (NASDAQ:MAR) was founded in 1927 and is based in Bethesda, Maryland. Marriott International, Inc. (NASDAQ:MAR) operates, franchises, and licenses hotel, residential, and timeshare properties worldwide.
On September 15, Berenberg analyst Stuart Gordon upgraded Marriott International, Inc. (NASDAQ:MAR) to Buy from Hold with a price target of $185, up from $165. The analyst said the fast recovery in lodging has yet to be reflected in the shares. “Even allowing for the threat of a recession moving into 2023, the shape of the recovery means that we expect strong RevPAR increases in 2023 across the sector,” the analyst told investors in a research note.
According to Insider Monkey’s data, 46 hedge funds were bullish on Marriott International, Inc. (NASDAQ:MAR) at the end of June 2022, compared to 52 funds in the earlier quarter. Boykin Curry’s Eagle Capital Management is the leading position holder in the company, with 8.81 million shares worth $1.2 billion.
Here is what Aristotle Capital Management Small Cap Equity has to say about Marriott International Inc. (NYSE:MAR) in its Q1 2022 investor letter:
“Marriott International outperformed in the first quarter following a better-than-expected earnings report for the company’s fourth quarter of 2021. During the pandemic, the company reduced expenses which improved operating leverage as revenue recovers. Expectations for travel in 2022 have improved as COVID cases have declined. The company has a strong pipeline of new hotels coming into the Marriott system. There are some indications that business-related travel is starting to recover.”
02. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders as of Q2, 2022: 57
Airbnb, Inc. (NASDAQ:ABNB) was founded in 2007 and is based in San Francisco, California. Airbnb, Inc. (NASDAQ:ABNB), together with its subsidiaries, operates a platform that enables hosts to offer stays and experiences to guests worldwide.
On October 4, Bernstein analyst Richard Clarke initiated coverage of Airbnb, Inc. (NASDAQ:ABNB) with an Outperform rating and a $143 price target. The analyst sees the vacation rental market as “far larger” than most estimates at $150 billion and believes Airbnb, Inc. (NASDAQ:ABNB) will gain a 37% share. He thinks Airbnb, Inc. (NASDAQ:ABNB) can maintain compound annual sales growth at over 15%, and the stock’s valuation is “no longer an obstacle”.
According to Insider Monkey’s data, 57 hedge funds were long Airbnb, Inc. (NASDAQ:ABNB) at the end of June 2022, compared to 66 funds in the last quarter. Jim Simons’ Renaissance Technologies is the leading position holder in the company, with 5.60 million shares worth over $499 million.
Here is what Polen Capital specifically said about Airbnb, Inc. (NASDAQ:ABNB) in its Q2 2022 investor letter:
“Airbnb, Inc. (NASDAQ:ABNB) was one of our largest detractors from performance in the second quarter. Airbnb is the clear market leader in private rental bookings globally, according to market research firm Euromonitor. The business is currently firing on all cylinders, with revenue and earnings growth well above our expectations and long-term estimates. It would be easy to say that it is because as the world reopens, people are traveling for the first time in two years, providing a short-term benefit to the company. But, Airbnb also grew quickly in 2021 when people were still hesitant to travel and preferred staying close to home. The company’s growth in 2022 is not an easy comparison like it is for online travel agencies (which are more hotel-oriented), airlines, and hotels. In fact, Airbnb’s business has outpaced the hotel industry growth by more than 1,250 basis points per year since 2019, showing far more resilience than hotels and online travel agencies.
Airbnb didn’t invent the private rental market, but it developed a better offering and helped it scale with robust network effects and a system of trust protecting travelers and hosts alike. It has diligently removed friction from the marketplace to catalyze demand.
The business model has very high incremental profit margins. When the company went public only a year and a half ago, it had pretax profit margins on a non-GAAP basis of approximately 5% by our calculations. This year, those margins should approach 30%. In addition, the company has generated approximately $3 billion in free cash flow over the last 12 months. The runway for growth in private rental is very long, especially considering that hybrid work will likely remain for the long-term, allowing for more business/leisure trips that work better in Airbnbs than hotels, in our view…” (Click here to read full text)
01. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Number of Hedge Fund Holders as of Q2, 2022: 60
Hilton Worldwide Holdings Inc. (NYSE:HLT) was founded in 1919. Hilton Worldwide Holdings Inc. (NYSE:HLT), a hospitality company, owns, leases, manages, develops, and franchises hotels and resorts.
On September 15, Berenberg analyst Stuart Gordon upgraded Hilton Worldwide Holdings Inc. (NYSE:HLT) to Buy from Hold with a price target of $152, up from $140. The analyst noted the fast recovery in lodging has yet to be reflected in the shares.
According to Insider Monkey’s second-quarter database, 60 hedge funds were long Hilton Worldwide Holdings Inc. (NYSE:HLT), up from 52 funds in the earlier quarter. Boykin Curry’s Eagle Capital Management is a prominent position holder in the company, with 6.45 million shares worth close to $720 million.
Here is what Pershing Square Holdings specifically said about Hilton Worldwide Holdings Inc. (NYSE:HLT) in its Q2 2022 investor letter:
“Hilton Worldwide Holdings Inc. (NYSE:HLT) is a high-quality, asset-light, high-margin business with significant long-term growth potential, led by a superb management team. The unforeseen arrival of the COVID-19 pandemic catalyzed a rapid and near-complete standstill in global travel, with RevPAR (the industry metric for same-store sales at a given hotel) down roughly 90% at the nadir of the pandemic. We increased our investment in Hilton during the pandemic as we believed the economic dislocation from COVID-19 would prove to be transient and that industry projections regarding the timeline for recovery were too pessimistic.
From the moment the pandemic began, Hilton’s management team took decisive actions to ensure the company not only managed through what it knew would be a challenging period, but also positioned the company to generate improved margins, cash flows, and investment returns once the business recovered. In hindsight, Hilton’s experience with COVID-19 – the 100-year proverbial flood – affirmed the company’s unique high-quality, asset light, high-margin business model, and reinforced our belief that Hilton deserves a premium valuation.
While Hilton entered 2022 impacted by the Omicron variant, results have vastly improved throughout the year as COVID-19 has evolved towards a more endemic virus, and consumer behavior has adapted accordingly. In recent months, Hilton’s system-wide RevPAR has surpassed 2019 levels and continues to improve. Recent strength has been led by domestic leisure travel occasions as consumer spending continues to shift from goods to services. …” (Click here to read the full text)
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