Friday, August 08, 2008

Lucky Eight

Much is being made of the Chinese obsession with the number eight. You have to admit even the sight of the number as written in English and other Western World languages is alluring with its soft symmetrical curves. The Chinese character is quite appealing also with two chic, graceful lines. However, the number gets is cache from spoken word, which in Chinese sounds similar to the word for prosperity.

It stands to reason that businesses with eight in the company or product name would fare well in the Chinese market. I went searching this week for such companies doing business in China. First name to pop up was Super 8 Hotels owned by Wyndham Worldwide (WYN: NYSE).

The whole “eight” marketing strategy is not lost on the good folks from Super 8 either. They already planted a flag in China with seventy-nine economy hotels in the largest cities in China.

With a market cap of $3.5 billion, Wyndham is a well established mid cap. WYN shares offer a 0.87% dividend yield and trade at a modest 8.3 times forward earnings. That seems like a bargain compared to the lodging industry average PE of 13.4. WYN share are also look cheap based on cash flow, trading at 6.0 times CFO compared to an average of 11.6 times for the industry.

Hotels fell out of favor with investors as fuel prices spiked and recession became a reality. With the lucky eight in their fortune cookie, Wyndham Worldwide might be the stock for contrarian investors.


Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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