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Here's Why You Should Retain Host Hotels (HST) Stock Now

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·4-min read
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Host Hotels HST is well poised to benefit from a solid portfolio of upscale hotels across attractive markets. However, recovery in core business transient might be tepid amid depressed business travel, delayed return to offices and continuation of some convention activity online.

HST is seeing a recovery in leisure demand in the markets of Miami, Phoenix, Hawaii and the Sunbelt regions. The lodging industry is resuming operations and will likely benefit from the relaxation of regulations, acceleration in vaccine distribution and improving supply-demand fundamentals. This enables the hotel real estate investment trust to witness a gradual improvement in occupancy and revenue per available room.

Host Hotels makes strategic capital allocations to improve its portfolio quality and strengthen its position in the United States, with a greater scale and competitive advantage. HST has made a significant acquisition of high-quality properties over the past years, with scope for long-term growth.

HST is deepening its acquisition focus to include urban markets beyond the top 25 ones. In December, Host Hotels acquired a fee simple interest in The Alida, Savannah, for approximately $103 million of cash. The buyout is aimed to elevate the earnings before interest, taxes, depreciation and amortization growth profile of Host Hotels’ portfolio.

Additionally, Host Hotels enjoys a decent balance sheet position and continues taking steps to preserve liquidity to withstand the current travel disruptions. As of Sep 30, 2021, it had cash and cash equivalents of $1.04 billion. Moreover, with no material debt maturities until October 2023, Host Hotels has ample financial flexibility to deploy capital for long-term growth opportunities and at the same time, carry out redevelopment initiatives.

Shares of this currently Zacks Rank #3 (Hold) player have gained 16.9% over the past three months compared with the industry’s growth of 1.4%.However, the trend in estimate revisions for first quarter 2022 funds from operations (FFO) per share does not indicate a favorable outlook for the company as it has decreased 9.1% in the past month.

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Zacks Investment Research

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Nonetheless, recovery in core business transient and group travel demand is likely to be tepid amid depressed business travel, delayed return to offices and continuation of some convention activity online.

Moreover, the spike in online short-term rentals, including as a flexible option for apartment buildings, has elevated supply in the lodging industry and has increased competition in certain markets.

Stocks to Consider

Some better-ranked stocks from the REIT sector are Extra Space Storage EXR, OUTFRONT Media OUT and CubeSmart CUBE.

Extra Space flaunts a Zacks Rank #1 (Strong Buy) at present. Shares of EXR have gained 18.4% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Extra Space’s 2021 FFO per share has been raised 2.8% over the past two months. Over the last four quarters, EXR’s FFO per share surpassed the consensus mark on all occasions, the average being 5.9%.

OUTFRONT Media flaunts a Zacks Rank of 1 at present. Shares of OUT have gained 6% in the past six months.

The Zacks Consensus Estimate for OUTFRONT Media’s 2021 FFO per share has been raised 11.2% over the past month. Over the last four quarters, OUT’s FFO per share surpassed the consensus mark on three occasions and came in line with the same in the remaining quarter, the average beat being 44.9%.

The Zacks Consensus Estimate for CubeSmart’s 2021 FFO per share has been raised 1.9% in the past two months. Over the last four quarters, CUBE’s FFO per share surpassed the consensus mark on all occasions, the average being 7.1%.

Currently, CUBE sports a Zacks Rank of 1. Shares of CubeSmart have appreciated 5.6% in the past six months.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report

Extra Space Storage Inc (EXR) : Free Stock Analysis Report

CubeSmart (CUBE) : Free Stock Analysis Report

OUTFRONT Media Inc. (OUT) : Free Stock Analysis Report

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