Hilton Worldwide Holdings Inc. (NYSE:HLT) is a potential stock that can go up higher in near term. Hilton is currently trading at $21.50 per share and potentially going up to $30 or higher by the year 2016.
Many investors like to travel and should be familiar with the Hilton brand. It is one of the largest hospitality companies in the world. It has more than 4,000 hotels and resorts all around the world. At the moment, there are almost 680,000 rooms total. The company benefits from long, positive brand global recognition. There are total 10 world-class Hilton brands such as the Conrad, Embassy Suites, DoubleTree, Hampton Inn, etc. It was founded in 1919 by Conrad Hilton and has been well-established and growing since then. There are more than 150,000 employees and 160,000 individuals at franchised locations.
Some of the statistics about this stock:
Ticker Symbol: HLT
Actual E.P.S. FY 2013: $0.45
Estimated E.P.S. FY 2014: $0.65
Estimated E.P.S. FY 2015: $0.75
Current P/E Ratio: 44.90
Shares Outstanding: 985 Million
Market Cap: $21.8 Billion
The company had its IPO around three months ago in December 2013. Since then, the stock hasn't changed much and basically stayed flat at around $21 to $23 level. After this consolidation, the stock will explode and go up based on the following reasons. It is really an attractive stock.
1. Loyalty program, Hilton HHonors, attracted about 40 million members around the world. The company continues to expand overseas and thus its earnings gains will be substantial in the future.
2. The company's diverse brand lineup enables to drive costs down for customers and provides enough incentives for most customers' needs.
3. The company's future outlook is impressive. There are around 190,000 rooms scheduled to be opened which makes this company the largest hospitality in the world. It keeps expanding worldwide. Since 2007, Hilton doubled its rooms in Asia region specifically in China. China is a huge market for Hilton.
4. The industry's future outlook is good. In the near future, the global economy is looking bright. In the long run, there will be more people traveling and need a place to live. We can see that the global tourism has doubled over the last 20 years; there will be increases in global travel and tourism in the next 20 years.
5. The company is generating lots of cash flows from its hotels around the world. Its hotels are situated in the best locations such as in New York and London.
6. Barriers to entry are very high for this hotel industry.
The above are positive facts about this company and its industry. There is one negative fact: Hilton has lots of debts to pay. But, the company won't need to pay those debts until 2018. Also, with the current excessive cash flows, the company can pay off those debts before 2018.
Based on these factors, the stock should go up in the near future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.