27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
The hotel space could certainly get a little cozier.
Amid market fragmentation and rising competition from alternative accommodations, Morgan Stanley sees prospects for consolidation.
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!
The Ratings
Analyst Thomas Allen reiterated Overweight ratings on Hilton Worldwide Holdings Inc (NYSE:HLT) and Marriott International Inc (NASDAQ:MAR). Morgan Stanley has Equal-weight ratings on Choice Hotels International Inc (NYSE:CHH), Extended Stay America Inc (NYSE:STAY), Hyatt Hotels Corporation (NYSE:H), InterContinental Hotels Group PLC (ADR) (NYSE:IHG) and La Quinta Holdings Inc (NYSE:LQ).
The Thesis
Compounding challenges in the industry may incentivize merger pursuits, Allen said in a Friday note. (See Allen's track record here.)
“Given the current low RevPAR [revenue per available room] growth environment, we believe operators could consider other avenues to create value, and with Marriott-Starwood so far illustrating a successful integration, we see potential for further consolidation,” Allen said.
Morgan Stanley identified 25 permutations that could be accretive to shareholders with pro forma leverage with a multiple less than five.
FREE REPORT: How To Learn Options Trading Fast
In this special report, you will learn the four best strategies for trading options, how to stay safe as a complete beginner, a 411% trade case study, PLUS how to access two new potential winning options trades starting today.Claim Your Free Report Here.
The three most accretive involve Choice’s purchase of either Whitbread, Extended Stay or La Quinta. Rounding out the top five are Hyatt or Hilton’s purchase of Whitbread.
Whitbread is seen to be the most accretive target for every industry player with the exception of Extended Stay, Allen said. Extended Stay and La Quinta are considered the next most accretive targets.
Accor and Choice could see the greatest accretion as buyers, followed by Hyatt, Hilton and Marriott, with the order dependent on seller.
Morgan Stanley’s model assumes the hypothetical buyer pays a 20-percent premium to current value; 3-percent revenue synergies; 50-basis-point margin improvement in both businesses; and a transaction funded with 50 percent debt and 50 percent stock.
Price Action
At the time of publication, shares were relatively unmoved by the report, with Marriott up 1.4 percent, Hilton 1.2 percent and the valuation of the rest trading by less than 1 percent difference Friday.
Related Links:
Host Hotels & Resorts Upgraded On Improving Growth Prospects
The Hotel Pair Trade: Hilton vs. Marriott
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.