Market Overview

One Hotel Stock Is Better Than Others, Says Chantico Global's Sanchez

One Hotel Stock Is Better Than Others, Says Chantico Global's Sanchez

Hotel stocks are on a two-day winning streak, and bullish investors with a long-term time frame should pick one name over the others, according to Chantico Global CEO Gina Sanchez.

Why Sanchez Likes Hilton

The hotel industry is among the hardest hit in the coronavirus pandemic, but this won't last forever, Sanchez said on a recent CNBC "Trading Nation" segment.

Once the world overcomes the virus, the business travel segment will be first to recover from "a lot of pent-up plans" as many face-to-face meetings "need to happen," she said. 

Among the multiple names investors can pick from, Hilton Hotels Corporation (NYSE: HLT) is the "best quality" name, Sanchez said. The company has "very, very high" operating margins that imply it has some flexibility to capture market share.

In comparison, Marriott International Inc (NASDAQ: MAR) is a lot more leveraged, the CEO said. 

What Makes Hilton Attractive 

Hilton also boasts an attractive free cash flow yield and good net interest coverage, Sanchez said. This gives the company a "better" balance sheet compared to its peers and better operating margins, she said. 

"I think that this is going to be your best of the stocks." 

What's Next For Hotels 

The hotel industry will continue facing a major headwind that existed prior to the coronavirus in that it is "overbuilt," Blue Line Capital Bill Baruch also said on "Trading Nation."

There are already "too many" hotels, and the industry will soon need to deal with lower overall discretionary spending in the U.S., he said. 

"There's still too much uncertainty in the states right now."

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