Starwood Hotels (HOT) Stock Research

Report
Starwood Hotels (HOT) founded in 1969, is a worldwide company that develops, owns, and operates
luxury hotels and resorts as well as developing, marketing, financing, and selling vacation ownership
resorts and residential units in mixed use hotel projects. In 2006, Starwood Hotels & resorts owned,
leased, and franchised 871 hotels with approximately 266,000 rooms. It also had 25 vacation ownership
resorts and residential properties in the United States, Mexico, Aruba, and the Bahamas, as of the above
date. Starwood operates hotels and resorts under the brand names, St. Regis Hotels & Resorts, The
Luxury Collection, W Hotels, Westin Hotels & Resorts, Le Meridien, Sheraton Hotels & Resorts, and Four
Points by Sheraton in the United States, Mexico, Aruba, and the Bahamas. They are headquartered in
White Plains, New York.

Description: The consumer discretionary stocks include companies whose sales come from
consumer discretionary income purchases. Discretionary income = gross income less taxes and
necessities such as rent, mortgage and food (see full discretionary description: competitors,
industry ratios, best stocks, market leaders, aggregate SWOT Analysis, and streaming industry
news).

Profit Analysis: The best way to profit from discretionary stock investments is to find the most
undervalued investments (Wall Street and Main Street buy ratings) during economic recessions.
Those investments should be undervalued (see Wall Street on left side), and have high Main
Street Common Sense investment ratings (see Main Street on right side). When an economic
recovery occurs, discretionary stocks tend to outperform the general stock market, because
consumers quickly resume spending on items they wanted, but resisted buying during tougher
economic times. Eventually those investments become overvalued, because profits and stock
prices increase past their fair values. In other words, the margin of safety becomes low or
negative. During the last stages of an economic business cycle, just before a recession, it is best
to sell discretionary stocks, because they are likely to decrease in price the fastest. Selling a stock
investment is difficult to do properly. Expensive (overvalued) stocks with low Main Street
Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are
the best and two sell ratings are the worst possible stock investments. As a general rule, the
larger the investment potential (margin of safety), the safer the investment.

Trading Strategy: During economic recessions, consumers tend to cut back on discretionary
expenses to save money. Less spending by consumers eventually decreases business revenue and
stock prices. During economic recoveries, consumers have more discretionary income, so
spending quickly increases. Higher spending increases business revenue and eventually increases
stock prices. During long economic expansions, discretionary income increase, but at a slower
pace than during the initial economic recovery stage.