May 28, 2013|
Stock Talk - Jim Royal, Motley Fool
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Talk about stocks in this segment we got him. Oil from Motley -- joining us and he's got to stocks the first one -- and hospitality properties of pretty good dividend Payer. Jim good morning welcome to the show. Is this say at this Reiman hospitality properties incorporated is this a real estate investment trust. It'd it'd be just recently converted into reach late last year and that that's part the whole special situation. That's going on here ran into Ryan and own or the hot hand convention hotels and -- these -- absolutely premier property. They converted to re late last year and why that's significant as investors are willing to pay more -- -- because although it basically. They pay out so much of their cash flow and get it up. But what happened yet the market really hasn't. -- to this story quite yet. Because investors are paying below what an operable. Impacted here your peers are trading. Okay they'll be this is that it. Premier property because convention hotel in -- years and it. In advance that would have a lot of revenue visibility and so and it produces more stable cash flow than your average. Hotel they can charge cancellation beat and people want to maintain that reputation for years so. Late last year this part of the conversion that struck a deal with Mary I -- get -- Best Samaria and tire distribution network area is enormous and the date they've got these rewards program and it's part of that. Part of the conversion. Writing -- access to debt and get the cut its own marketing costs that helped it achieve the best cash local room in the sector but it trade at a discount. -- other year. -- -- I'm just why it is so why is it trading at a discount him. Well I think it. There's this there's this lag between when it converted. Permanent permanent normal. Normal corporation into -- REIT and investors just haven't caught up to that. -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- What spent tactic here that the CEO is committed. -- of buying back stock and held that the company trade at least in line with peers if not better. -- So what do you think this -- worth 'cause I can buy today for 41 dollars a share. Wecht I think it to go at least the sixty and maybe higher that you know upside of 50% today plot. You've got a four point 7% that it. -- know as I see you're you're getting paid to wait -- -- you. Are right. The next one that you have force is CST brands incorporated the symbol for the CST. This one up by 17 cents this morning at 33 dollars a share no dividend on this one from an NC. There is there that in fact is that this is part of part of the special situation is that yes he was shut off from Blair. -- huge multi multi billion dollar company. Refiner and adjust and all this gas state. The gas station they're tiny part of what Valero why. And that would operate nearly 19100 convenience stores and slash gas stations you have in Canada. 60% of the US northern Texas -- might not be familiar with that name. It was just an all last month he still there's a real information lag here in in what the market beat. And what's actually going on. Now as a standalone entity. The company can now focus just -- a convenience store right before they rejected. Small portion of the multi billion dollar energy company but by refocusing. If he can bring it margins up. Two the industry average is really helped direct. I was gonna ask is that profitable business it would seem to be. -- you -- when you go to buy gas you know worried about how much the bag of chips cost you just want the bag chips. Right exactly and that that the the real cute in what what caught inside -- right what's in the convenience of the -- They -- is much less important to profitability really. And what which you can get from the inside the store and the convenience store industry tremendously -- Basically for the past twenty years with that with the exception of the year to end -- you know in the Great Recession this industry is -- very very consistent. -- -- Right so this is a 33 dollar stock would -- what do you think it might be -- Well I think I think -- -- to go to 47. About 40% higher and let me know to. That they do pay dividends little less than 2% that. That's part of the lag in the information life and I'm talking about -- of the public finance site on the other the dividend here Q. Terry will listen very good picks and we appreciate your time Jim thank you. Jim royal from the Motley -- is to stock picks were CST. Brands rate and that's trading at 33 dollars a share that symbol for CST brands is CST. And I he think that's is going to be 47 dollar stock. In the other one was -- -- and and here's why -- -- reefs are gonna do very well just in general as an estimate talked about the stock in this specific. But as a classic us once you see some kind of an uptick. In construction and reconstruction we -- collapsed in it in -- I was out west and a couple bridges -- yeah. The two countries is falling apart infrastructures falling apart you've got homes falling apart you've got office buildings general. At some point is kind of like cars that we had talked about how your car gets to a certain age you have to replace it well our bridges. Our pipelines. Office buildings are falling apart and he gets to the point where you have to replace them. When that occurs real estate is going to go up in value. Because labor is gonna be more expensive than it was in the past. In the commodities associated with building. Are going to be works doesn't talk about steel and cement so the building we're sitting in today I think it's about thirty maybe forty years old. Yet so it caught thirty years old. If this thing fell down and you had to rebuild it. It's gonna cost -- a lot more to build it today than it did thirty years ago and once you get to the point where you're replacing. Infrastructure whether it's office buildings Holmes lore. Or commercial real state. I I think yours he resurgence in pricing and end and -- going to be competing with all the bridges and highways that need to be. So a couple of extinct -- and -- will certainly post those on our FaceBook page by the way like us on FaceBook and you have a chance. To win our 25 dollar were Ricard we will select the winner of that in less than one -- so stay tuned. To the financial exchange up next we're going to be talking about stocks June. That Carl Icahn has been buying now I've talked about this in the past. You can do a lot worse than following in the footsteps of Warren Buffett -- like Carl Icahn that's an exit.