Hotels

What makes Choice Hotels (CHH) such a dynamic company: buy now?


Dynamic investing involves following the recent trend of a stock, which can be both ways. In the “long” context, investors “will buy at a high price, but hope to sell even higher”. And for investors who follow this methodology, it is essential to take advantage of trends in a stock’s price; Once a stock establishes a price, it is more than likely to continue moving in that direction. The goal is that once a stock moves on a fixed path, it will lead to timely and profitable trades.

Even though momentum is a popular characteristic of stocks, it can be difficult to define. The debate over which best and worst metrics to focus on is a long one, but the Zacks Momentum Style Score, which is part of the Zacks Style Scores, helps us solve this problem.

Below we take a look Choice Hotels (CHH), which currently has a Momentum Style Score of B. We also discuss some of the main drivers of the Momentum Style Score, such as price changes and revisions to earnings estimates.

It’s also important to note that Style Scores work as a supplement to Zacks Rank, our stock rating system which has an impressive track record of outperformance. Choice Hotels currently has a Zacks rank of # 2 (Buy). Our research shows that stocks rated Zacks Rank # 1 (Strong Buy) and # 2 (Buy) and Style A or B scores outperform the market over the following month period.

You can see the current list of Zacks # 1 ranking actions here >>>

Ready to beat the market?

In order to see if CHH is a promising choice, let’s take a look at a few Momentum-style pieces to see if this hotel franchisor holds up.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and whether buyers or sellers currently have the upper hand. It is also useful to compare a stock to its industry, as this can help investors identify the best companies in a particular field.

For CHH, shares rose 2.18% over the past week, while Zacks’ hotel and motel industry rose 1.47% over the same period. Stocks are also doing very well over a longer time frame, as the 5.72% monthly price change compares favorably with the industry’s 4.97% performance.

While any stock can see its price rise, it takes a real winner to consistently beat the market. This is why it can also be useful to look at longer-term price metrics, such as performance over the past three months or the past year. In the last quarter, shares of Choice Hotels rose 12.78% and 42.41% last year. In comparison, the S&P 500 was only up 7.98% and 26.88%, respectively.

Investors should also pay attention to the average 20-day CHH trading volume. Volume is useful in many ways, and the 20-day average sets a good price / volume benchmark; a rising stock with above average volume is usually a bullish sign, while a falling stock with above average volume is usually bearish. CHH currently holds an average of 207,737 shares over the past 20 days.

Revenue Outlook

The Zacks Momentum style score encompasses many things, including estimate revisions and the movement of a stock’s price. Investors should note that earnings estimates are also important to the Zacks rankings, and a nice track here may hold promise. We recently noticed this with CHH.

In the past two months, 4 profit estimates have increased compared to none less for the entire year. These revisions helped raise the consensus estimate for CHH from $ 3.93 to $ 4.09 in the past 60 days. For the next fiscal year, 4 estimates have increased while there has been no downward revision during the same period.

Final result

Considering all of these, it’s no surprise that CHH is a # 2 (Buy) stock with a Momentum Score of B. If you’re looking for a new pick that should increase in the near term, be sure to keep Choice. Hotels on your shortlist.

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Choice Hotels International, Inc. (CHH): Free Inventory Analysis Report

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