Mad Money

Earnings Season All-Star: Starwood Hotels

With earnings season behind us, Cramer is taking a look at some of the companies that reported the best quarters and gave the most optimistic conference calls; simply, the best of the best.

One stock that gave Cramer chills because of it's next-to-flawless quarter, is Starwood Hotels. The hotel company owns brands like Sheraton, Westin and Le Meridien, with nearly 1,000 properties in 100 different countries. This earnings season, the company reported better than expected numbers, but its outlook and optimism all but blew away most other conference calls the street was privy to.

The company earned 51 cents per share, which was a 29 cent earnings beat on better than expected revenues, not mere cost cutting, while issuing upside guidance for 2010 as it expects the luxury hotel business to turn around this year, following trends in the global economy. Cramer points out that the company was not only helped by leisure and business travel rebounding from its lows in 2009, but also from solid corporate strategy where the company closed underperforming hotels, while opening new, promising locations. This combination of factors served as a slingshot to Starwood's operations and blasted away expectations.

Room for Profits?

Cramer sees occupancy rates also increasing, and notes that as this trend increases, especially in key places like New York, the company will be better positioned to raise prices and make more money.

He also sees the company as a play on international travel, as the company has 80% of its rooms in international markets and is in a great position to benefit from global wealth creation. The company is also improving itself, Cramer says, as it moves towards a franchise business model. Starwood also took advantage of the recession to open new hotels and renovate old ones at low costs, opening 83 new hotels last year and signing contracts to open 77 more.

What's the bottom line? Starwood's tremendous numbers and bullish conference calls have persuaded Cramer that Starwood Hotels is a buy.

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