Is Starwood Hotels Still a HOT Investment?

With shares of Starwood Hotels (NYSE:HOT) trading at around $54.14 is HOT an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Starwood Hotels has been a big winner over the past three years. The management at Starwood Hotels is very strategic. For one, they are masters of low-cost operations. For a more specific example of their strategic approach, they are shying away from hotel construction for the next two to three years. If the economy falters, they will have played it safe. It the economy continues to recover, they will see increased demand. It’s a win/win.

This doesn’t mean spending has been cut all together. Starwood Hotels just spent $230 million renovating and refurbishing four Hawaiian hotels as part of a brand revitalization campaign. Starwood Hotels is also putting $200 million toward brand revitalization in Europe. Hawaii is a key location since so many travelers choose it for luxury and relaxation. There was a 10.80% YoY increase in visitor spending in Hawaii in 2011. There is expected to be a 9.4% increase in 2012. While that might not be as robust, it’s still an increase.  

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Starwood Hotels currently offers a 2.30% yield, which is better than Marriot International (NYSE:MAR), which offers a 1.50% yield. It’s also better than Hyatt Hotels Corporation (NYSE:H), which offers no yield. Analysts seem to like Starwood Hotels as there are 19 Buy recommendations, 11 Hold recommendations, and no Sell recommendations.