Motel operator La Quinta
In other words, what a difference a year makes. This time in 2004, the Dallas-based concern reported a net loss of about $12 million, and on Friday, investors were quick to celebrate the company's reversal of fortune. Indeed, when the dust settled on the day's market action, shares of La Quinta were worth $8.21 a pop, an increase of more than 5%.
That sub-$10 price is an eye-catcher, but it doesn't, of course, necessarily make the stock a bargain. Still, I think investors who are willing to tolerate the potential for volatility that comes with the lodging industry should consider booking a reservation here.
Despite Friday's upswing, La Quinta is still down nearly 10% on the year. On the plus side, however, the company has delivered double- or triple-digit gains in each of the last four years. More importantly, its operating fundamentals are strengthening. Revenue per available room (RevPAR) was up 10% during the most recent period, a trajectory that the firm anticipates will continue into the next quarter and beyond.
That said, innkeepers are heavily leveraged to economic conditions. And while low-cost providers like La Quinta are better insulated than tonier peers such as, say, Marriott International
That's true of the competition too, however, and given the built-in competitive advantage that lower prices provide, La Quinta appears better positioned than most to withstand an economic downturn, should one occur.
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Shannon Zimmerman runs point on the Motley Fool Champion Funds newsletter service and owns none of the companies mentioned above. You can check out the Fool's disclosure policy by clicking right here.