Hilton stock best equipped to weather the coronavirus crisis: trader

Hotel stocks were rebounding for a second day in a row.

Hilton, Hyatt, InterContinental and Marriott were all in the green Wednesday on hopes of stimulus out of a $2 trillion deal struck in Congress.

Gina Sanchez, CEO of Chantico Global, said the hotel stocks will recover eventually, led by demand among one type of traveler.

“Hilton, Hyatt, Intercontinental and Marriott are all poised to receive probably the best results of the hotel chains because they receive so much business travel and business travel will be the first to recover. I think that you’re going to see a lot of pent-up plans that need to happen at some point soon,” Sanchez said Tuesday on CNBC’s “Trading Nation.”

However, the road to recovery will not be level for all the stocks, she said, pegging Hilton as best suited to weather the crisis.

“The hotel stock that I think has the best quality is going to be something like Hilton. Hilton has very, very high operating margins, meaning that they can cut into those quite a bit. Marriott was a lot more leveraged in that regard. So I think that Hilton, of all of these, they look good on several levels — they have good free cash flow yields, they have good net interest coverage, meaning that they have a better balance sheet, they have better operating margins and so I think that that is going to be your best bet of the stocks,” said Sanchez.

Hilton shares were up 7% on Wednesday, and 31% higher for the past week. The stock remains 33% lower for the year.

Bill Baruch, president of Blue Line Capital, is not as optimistic any of the hotel stocks are a good bet right now.

“I just don’t think this is a space that you need to be in right now. Here’s the thing, hotels, overall, they’re overbuilt. There’s simply too many of them already. Now you’re removing travel, you’re taking away discretionary spending,” Baruch said during the same segment. “There’s still too much uncertainty in the States right now.”

The four major hotel stocks generate a bulk of their business in the United States, a country with more than 55,000 confirmed coronavirus cases. Hyatt has the most revenue exposure to the U.S. at 83% of total sales.


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