The company is the largest provider of interactive TV and broadband services to hotels and motels in the U.S., Canada and some international markets. LodgeNet sells the on-demand games, music and movies so many travelers take advantage of while on vacation. With the summer upon us, this stock should be ready to move, Cramer says.
LodgeNet merged with its second-largest competitor, On Command, giving it a huge market share and wider margins now that it can charge for services the number two was giving away for free. Of roughly 3.8 million rooms in large and medium-sized hotels, LodgeNet now is in 1.8 million, thanks to the deal.
It also acquired Stay Online, a high-speed internet provider to hotel rooms. Now that LNET has the pipes into these rooms, it just has to start cramming in more services, Cramer says, to improve revenues per room.
The international business is strong, too, especially after a deal with Las Vegas Sands that brings LodgeNet’s services to Macao, the Las Vegas of the orient.
Add to all this that LNET is looking to get into time shares, travel centers and hospitals to boot. The hospital story could be huge, Cramer says.
Bottom Line: LNET gives you a lot of ways to win, and since it has pulled back from the high, Cramer thinks it’s worth owning. But be careful, use your limit orders and don’t buy in after hours.
Questions? Comments? email@example.com