Company Description
LaSalle Hotel Properties is a leading multi-tenant, multi-
operator real estate investment trust, which owns interests in 19
upscale and luxury full-service hotels, totaling approximately
6,400 guest rooms in 14 markets in 11 states and the District of
Columbia. LaSalle Hotel Properties focuses on investing in
upscale and luxury full-service hotels located in urban, resort
and convention markets. The Company seeks to grow through
strategic relationships with premier internationally recognized
hotel operating companies including Marriott International, Inc.,
Westin Hotels & Resorts, Sheraton Hotels & Resorts, Crestline
Hotels and Resorts, Inc., Outrigger Lodging Services, Noble House
Hotels & Resorts, Hyatt Hotels Corporation, Benchmark
Hospitality, White Lodging Services Corporation, Sandcastle
Resorts & Hotels, and the Kimpton Hotel & Restaurant Group, LLC.
[Source: Company Press Release]
Reasons to Invest:
This weeks DOTW has been trending higher for nearly two years
now, pegging new highs almost on a monthly basis. What's even
more enticing is the fact that the stock is still trading under
$30/share. The stock's Point-and-Figure chart shows the company
on an ascending triple top breakout, which bodes well for a
continuation in the uphill trend. Furthermore, the annual
dividend yield is over 3%.
Without further ado, this week's drip of the week is LaSalle
Hotel Properties (NYSE:LHO). LaSalle invests its time and money
in upscale luxury full-service hotels. Over the first two
quarters of 2004, LHO saw revenues increase by 73%, and their net
loss from continuing operations decrease by 96%. The company
noted that these figures were a direct reflection of high sales
from newly acquired properties and improved operating margins.
Maybe it's just me, but I speculate that when a company can turn
its net losses around and nearly erase that entire debt over the
course of six months, that they are on course to start raking in
the cash.
On August 26th, LHO successfully completed a $34.4 million secured
loan through Wells Fargo Bank at a fixed rate of 4.98%. The
five-year loan is collateralized by the company's 241-room Hilton
Alexandria Old Town Hotel, and proceeds from the financing are
going to be used to reduce LaSalle's outstanding balance on its
credit facility.
Nearly a month earlier, citing strong performance from its
business-orientated hotels, LaSalle raised its fiscal 04 outlook
to 6.5% from 5.5%. This would mean that LHO's earnings are
forecasted to be between, $8.2 to $9.6 million for the year, or
$1.73 to $1.78/share, which is up from their previous forecast of
$1.62 to $1.70/share.
LHO has gained more than ten points in the first nine months of
the year. Why is this important to note? One thing to keep in
mind is that the average trading volume per day for shares of LHO
is a measly 60,200. In most cases where trading volume is light
on a given stock, there is generally more insider trading than
outsider trading. If this were the case for LaSalle, I find
comfort in knowing that those insiders are buying stock as
opposed to selling it. This means that they have confidence in
their company and that they see the stock in undervalued
territory. On the other hand, regardless of who is
buying/selling shares, a gain of a point a month on light volume
is commonly viewed as bullish sentiment.
A quick look at LHO's quarterly chart and I note six consecutive
quarters of gains for the stock. The MACD indicator on the
quarterly chart is obnoxiously bullish, and I would speculate to
see it grow even stronger over the next year or two, especially
if LHO can erase its net losses.
The monthly chart shows 16 out of the past 20 months in higher
territory. It doesn't take a mathematician to note that this
means that 80% of the time LHO is going to close higher. I'm not
sure about you, but I am willing to lay some risk capital on the
line for an 80% chance of a positive return. Again I note the
MACD on a buy signal.
Let's move onto the short-term outlook. While I like the chances
of this DRIP providing us some solid returns over the next year
or two, I am not ready to enroll just yet. Why is that? First
and foremost, the daily chart looks phenomenal. But, how much of
a good thing is too good to be true? LHO broke over the top line
of its February 03 regression channel during the last week of
trading in August. Upon doing this, the stock has trended
higher, using its underlying moving averages as support for
further gains. On that note, I think that we should brace
ourselves for a few sessions (maybe even a week or two) of profit
taking. Historically speaking, I can't recall a stock that
remained overtop of a long-term channel for more than a few
weeks. With that said, I think that the mid-August push higher,
urged the stock into overextended territory. Generally when a
stock gets overextended, it rolls over and retests support before
repeating the trend all over again. While the simple 10-DMA has
served as strong support for just about a month now, I believe we
are going to see a return to the channel and quite possibly a
retest of the 100-DMA. Coincidentally the 100-DMA is right at
the bottom bar of the channel, which should help to provide a
double-support-line, and push the stock back into positive
territory.
Basically, I would put the call into my broker and order one
share of LHO. I would have the stock shipped to me in my name,
and then sit on the sidelines. Once I see where LHO finds
support (inside its channel - not overtop of it), I will put the
call into their Agent and get enrolled. I would hope to see the
stock pullback to the $25-$27 range before I initiated my plan,
but that's just me.
LaSalle offers an annual dividend of $0.96/share owned, which
tallies out to an annual yield of 3.33%. The next dividend
installment is due to be paid out on October 15th.
Editors Note *CORRECTION TO 08/20/04 DOTW!*
Busted! One of our loyal readers pointed out an error in my
Kimco (NYSE:KIM) Drip of the Week article. It appears that while
our site states that KIM does not charge any dividend
reinvestment fees, the company has added fees to their DRIP. The
following few paragraphs are from the company's website.
(a) Charges for investments made for Participants (other than for
reinvestment of dividends).
The Plan Administrator will deduct a service charge for
investments made for the Participant, other than a reinvestment
of dividends. In addition, Participants will be charged their
proportionate share of brokerage commissions on each purchase
transaction, other than a reinvestment of dividends, for
purchases made in the open market. The Participant's share of
brokerage commissions on small transactions may be less than
usual since the Plan Administrator will buy or sell shares in
volume for all Participants and that commission savings will be
passed on to each Participant.
Subsequent Purchases through optional cash payments: $5
Subsequent Purchases through monthly automatic deductions: $2
(b) Charges for investments made for Participants for
reinvestment of dividends.
Generally, Kimco will pay all brokerage commissions and other
administrative charges on behalf of the Participants with respect
to the reinvestment of dividends. In the event such fees exceed
5% of the cash dividends Participants reinvest, Participants will
be required to pay the entire amount of such fees. The brokerage
commissions and other administrativecharges currently do not, and
are not expected to in the future exceed 5% of the cash dividends
Participants reinvest.
---End Editor's Note---
This ends another exciting episode of the DripAdvisor.com Drip of
the Week. Stay tuned next week, as we will spotlight another
stock worthy of the DripAdvisor.com limelight.
Remember:
Plan your trade, and trade your plan.
Until Next Week,
Nich Sheldon
Editor In Chief
www.dripadvisor.com
questions@DripAdvisor.com
Broker Recommendations
Strong Buy 3
Buy 3
Hold 3
Sell 1
Strong Sell 0
Brokers Covering 10
DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = No
Accept Foreign Accounts: Yes
Temper Enrollment: Yes
Min/Max Investment = $100-$5,000/month
Reinvestment Fees -
Dividend investment fees: $0.00
Cash investment fees: $0.00
Auto reinvestment fees: N/A
Transfer Agent:
ComputerShare Investor Svcs.
312-360-5100
Corporate Headquarters:
LaSalle Hotel Properties
4800 Montgomery Lane, Suite M25
Bethesda, MD 20814
Phone: (301) 941-1500
Fax: (301) 941-1553
