Shares of Host Hotels & Resorts, Inc. (HST) crafted a new 52-week high, touching $19.87 during the trading session on Feb 26, 2014, as it gained momentum following strong fourth-quarter 2013 results and a dividend hike announcement. The closing price of this lodging real estate investment trust (REIT) on Feb 26 was $19.67. The trading volume for the session was 5.15 million shares.
Despite the strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left, given the improving market fundamentals, portfolio revamping activity and expected long-term earnings growth of 7.85%.
Growth Drivers
Host Hotels & Resorts disclosed fourth-quarter 2013 adjusted funds from operations (FFO) per share of 33 cents, exceeding the Zacks Consensus Estimate by 2 cents and the year-ago figure by 3 cents.
Quarterly results benefited from notable rise in total owned hotels revenues and comparable hotel Revenue Per Available Room (RevPAR). The company also declared a 7.7% sequential increase in its quarterly dividend.
Given its solid portfolio of luxury and upper upscale hotels, the company is poised to deliver better results in the quarters ahead too. The West Coast market remains attractive with strong lodging demand and lower supply.
Also, strategic portfolio restructuring activities bode well for its long-term growth and the dividend hike boosts investors’ confidence. As a matter of fact, the company has recorded an average earnings surprise of 7.87% in the past four quarters of 2013.
Other Stocks to Consider
Investors interested in the REIT industry may also consider stocks like Cousins Properties Inc. (CUZ), Liberty Property Trust (LRY) and Public Storage (PSA). All these stocks carry a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.
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