Wyndham, Starwood, Hyatt: 5 Hotel Stocks Loved by Hedge Funds

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Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) came in tied for first with 32 filers and is one of the world’s largest hotel companies. Starwood has been pressured of late—down almost 10% since October—due to lower than expected hotel revenues. With a recent dividend increase of 150%, this hotel now pays a dividend that that yields the highest of our five stocks at 2.4%. Starwood has robust exposure to luxury markets that should see higher room rates and visitations based on a rebounding economy. Starwood also expects to drive longer-term growth with more expansion outside of the U.S., with over 90% of its development pipeline in markets outside of North America.

Wyndham Worldwide Corporation (NYSE:WYN) is the other top hotel stock loved by hedge funds with 32 filers. Wyndham expects 2012 revenues to be up almost 6% and revenue per available room to be up as much as 8% this year. The expected increase is in despite of slowing vacation exchange revenues due to exposure to European weakness, but the valuation is impressive for Wyndham; the stock is a solid value investment. Its trailing P/E comes in at 20x, but its forward P/E is 14x and below major peers Starwood (19x) and Marriott (23x) quite significantly. With a bullish expected long-term earnings growth rate of 18%, its PEG ratio comes in at 0.85. Wyndham saw billionaire Stephen Mandel of Lone Pine Capital as its top fund owner in 3Q (check out Mandel’s newest stock picks).

To recap: all of these hotel stocks have seen pressure over the past few years to do global uncertainty, which has put a damper on both personal and business travel. A rebounding economy and lower pricing by many of the industry’s players should help spur a recovery, while those with a great deal of international operations should perform well on the back of better diversification.

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