Stock number one is:
Marriott International, Inc., (SYMBOL: MAR) and the headline says: China rich list topped by property developer Wang Jianlin – BBC News
Property developer Wang Jianlin is now China’s richest man, with a net worth of $22 billion. Bloomberg is reporting that Jianlin “has hired two investment banks to buy hotel-management companies in the U.S.” Shares in Marriott International are up about 3% today based on takeover speculation.
Marriott’s earnings are expected to grow 16-18% per year for the next three years. However, their long-term debt ratio is extremely high at 153% and their cash position is weak at $88 million as of December. It makes sense that a cash-rich investor could appeal to Marriott’s board of directors.
Traders and takeover speculators could accumulate shares at $41, but we wouldn’t otherwise recommend the stock due to the company’s cash and debt positions.
Our Ransom Note trendline says: HOLD MARRIOTT.
Stock number two is:
American Express Co., (SYMBOL: AXP) and the headline says: Time Inc. Buys Food & Wine, Travel & Leisure From Amex -- Bloomberg
Time Inc. has agreed to purchase American Express Publishing for approximately $100 million, for which parent company Time Warner can easily write a check. American Express “is selling the magazines because banking regulations restrict the company from non-financial activities,” reports Bloomberg.
Earnings per share at AmEx are expected to grow 10% per year for the next three years. The company gets over half its revenues from card spending, while maintaining strong credit quality and an extremely low delinquency ratio.
AmEx shares broke past long-term resistance in May, and have traded between $71 and $79 since that time. The company is doing well financially, but there’s no compelling reason to purchase shares.