Today’s Top Pick for 2014 is a real estate investment trust that owns upscale hotels. After a lull in the industry made it pull in its belt, the company has just reinstated its dividend.
FelCor Lodging Trust (FCH)
from The Turnaround Letter
Our top pick for 2014 is FelCor Lodging Trust (FCH), a real estate investment trust (REIT) that owns 61 upper-scale hotels around the U.S.
Going into the recession in 2008, FelCor had too many hotels in weaker markets and too much debt. Over the last few years, FelCor has refocused is portfolio on premier properties in the stronger hotel markets. It has also reduced debt and refinanced much of the remaining debt to reduce interest costs. All of these actions now have FelCor’s financial results heading in a positive direction.
Furthermore, macro industry conditions remain very favorable. Demand for hotel rooms has been growing steadily for the last few years, as both business and leisure travel rebounds. However, the supply of hotel rooms has been relatively flat, with very few new hotels being built.
Both the broad industry trends and the company’s strategic moves bode well for FelCor stock. Moreover, the company has just reinstated a small dividend, and we expect the payout to grow as FelCor’s results continue to improve.
Disclosure Note: Accounts managed by an affiliate of the Publisher of The Turnaround Letter own FelCor Lodging stock.
George Putnam III, The Turnaround Letter, www.turnaroundletter.com, 617-573-9550, December 27, 2013