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Host Hotels and Resorts is poised for a decent run upwards over the next few months I believe. Between the months of May and July, the stock dropped from a high of $18.76 all the way down to $11.14, a drop of 40.6%. Ouch! Ever since that low, the stock has risen back up to it’s current price of $14.27. This is a gain of 28.1%. I think that the stock is on it’s way back up to at least $18/share before the end of the year. This would give it a gain of 26.1% from today’s price.

I have come up with this price target purely by doing a quick technical analysis of the stock’s chart. Take a look at the chart below to see how it has fared over the past three months.

Based on my calculations, the slope of this positive sloping trendline is about +$1.76/month. Remember though that this is a fairly arbitrary line that was chosen based upon my opinion of the chart. I believe that this line does represent a fairly accurate view of how the stock has moved over the past few months. Even more encouraging is that it has continued to fare well, even as the market has been very shaky over the past few months.

Based on a slope of +$1.76/month, I believe that the stock should be well situated in the $18s by November.

One should take note though of a strong patch of resistance between $17.25 and $17.50. As you can see in the chart below, the stock struggled to make it through the elusive $17.50 mark as it traded in a narrow band between $16.00 and $17.50 for about four months between the beginning of January through the end of April.

You will notice at the end of May HST ended its’ short lived one-month above $17.50. As soon as it dropped below this mark, the stock tanked and dropped all the way down to $11.14/share in a little over a month.

I think that the stock will have an easy run up to the $17.50 range and then stagnate for a little while. I would either sell at this point or put a trailing stop loss order on the stock with a roughly $1.50 trail to lock in your profits.

If you get in before 9/30/2008, you will also be eligible for the $.20/share dividend. That puts the current yield at abot 5.6%. That beats any certificate or money market account these days

A few days ago I mentioned that I was going to purchase Host Hotels and Resorts (HST). This company operates hotels such as the Marriott, Ritz-Carlton, Hyatt, Four Seasons, Fairmont, Hilton, and Westin. Well this morning I made the purchase on the stock. When I first put the order in a few days ago, the stock was trading at $16.53/share. I put a $.47 trailing stop loss on it. Since I put that order in, the stop price dropped down to just above $16.50. This means that once the share price reached $16.50 my trade would be executed. This morning it was trading in the low $16s and I felt that it would be a good idea to just get in now instead of waiting for it to rise to the stop price. I put in a market order that was completed at a price of $16.11/share. After commissions were factored in, the weighted average cost was $16.31/share. At market close today it is sitting at $17.01/share. That is a 5.59% increase off the initial price, and a 4.29% increase off the weighted average price.

In order for me to break even on this trade, I must sell above $16.51/share. The reason for this $.40 increase in price above the initial buy price is because of commissions on the buy and sell. I am thinking about creating a trailing stop loss that starts at $15/share so that the most I can lose on the trade is 9%. As it stands now, I have made a 2.93% return for one day (1054% annualized) after all commissions have been factored in. According to Bankrate.com, the average one-year CD is yielding 2.90%. Looks like I beat the one-year national average in one day. Too bad I can trade like this everyday. Of course now that I have written this, the stock will tank down to $14 over the next week. Let’s hope not.

So why was the price up today? There are two reasons for this. The first reason is fairly obvious. The Dow was up 3.19% today, so one can say that the stock was just trending with the market today. That is a pretty easy statement to agree with. The other reason that may have caused the stock to rise today is that the company announced the date of their earnings call. They announced that they will be reporting on April 23rd. Perhaps the market is expecting better than expected news. I know I am. According to Yahoo! Finance, “The company has elected to be taxed as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income tax provided it distributes at least 90% of its taxable income to its shareholders.” What this means is that the higher the income, the higher the dividend. Typically the higher the dividend the higher the share price is. This move could be in anticipation of higher dividends. I guess we will all find out here in a few months.

Now that I have sold my stake in MakeMusic (MMUS), I am on the search for my next investment. After doing a few screens through Fidelity I came across a company that could be poised to make some nice gains. The company is Host Hotels and Resorts (HST). In the past year the stock has seen about a 35% drop in share price from around $26/share to its current rate of $16/share. Since the first of the year it has been trading in a solid consolidation pattern between $17.30 and $15.50/share. I think that if the price gains 5% above or below these two benchmarks then it has reached a breakout stage and will post large gains or losses.

One thing that I really like about the company is that their profit margin has continued to expand each year since FY 2003.

Even as the company has continued to grow sales, they have also increased their efficiency. This is always a good sign that things are going well for a company. Another good sign for a company is the payment of dividends. Currently the company boasts a $.20/share quarterly dividend. At current prices, and assuming that the dividend will remain at $.20/share the company will be paying a 4.86% dividend. Try finding a CD that will pay you that much these days! A final positive indicator for the stock is that it’s P/E is only at 16.3 right now. In comparison, it’s TTM 5-year P/E average is right around 40. Given historical P/E levels, this stock should really be trading in the high 30s and low 40s.Another convincing factor is that 3 accurate analysts rate HST as a buy, one as an outperform, and one as a neutral. Analysts can’t necessarily predict the future, but given the fact that none rate it as a sell makes me feel even more confident in the company.

Also, compared to other companies in its industry, it is doing much better. Its net margin is 13.4% compared to the industry average of only 3.8%. Return on equity is sitting at 13.1% compared to 7.1% in its industry. Finally, it has a debt to capital ratio of 51% compared to the industry average of 62.9%. In this statistic more is not better.

With all the fundamentals going right for this company, I feel comfortable making this stock a buy. This morning I placed a $.50 stop loss on the security. If it hit’s $16 I may play the $16-17 game for as long as I can and hopefully rack up a few profits while I’m at it. One thing that troubles me is that since the US economy is starting to head in the wrong direction, it might mean that people will be taking fewer vacations, and therefore using hotels much less.