We are neither crazy nor crooks. We dare to recommend a Real Estate Investment Trust (REIT) stock for entirely professional and unbiased reasons. The stock market backs investors who stand apart from packs. We cannot ask you to park cash in the wrong sectors. However, a business with the right assets can be a top stock pick.
Consider FelCor Lodging Trust Incorporated (NYSE: FCH). The stock has traded in early March 2008 at less than half of its 52-week high of $29.50. It is bad enough that anything remotely connected with real estate is now taboo. This stock goes a step further, apparently in the wrong direction. The Price to Earnings Ratio on Trailing Twelve Months Basis is twice as high as for the Services Sector. The Dividend Yield over the past five years is almost half the norm for the entire Real Estate Operations industry. Why bother with this company which has a negative sales growth rate during the recent past? The Gross Margin is a measly 23.50 over the past four quarters, whereas competitors normally sport almost 60 in this industry.
The answer takes time, but is worth your dollars. FCH has some 28 thousand hotel and resort rooms under its broad belt. It boasts of brand names no less than Hilton and Intercontinental. It has sites near airports, business centers, and leisure spots. The management may operate or sell the more than 75 properties it has, but investors are set to gain in any case. Neither business travel nor vacations are going away. Therefore, the inherent value of the stock is way above what average stock investors may think today.
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