United & Babson Investment Report recommends Marriott (NYSE, MHS, $16.37) as a rebound play in the lagging hotel construction business.
"Marriott should emerge as a slimmed down but much more profitable outfit. It has shed a number of non-hotel businesses and branched out into new growth fields -- golf course management, child-care services, building maintenance and retirement-community development. Encouragingly, bookings are starting to accelerate and cash flow remains strong. We are looking for per share results of around $0.90 this year and $1.10 to $1.20 next. Marriott is fully capable of earning over $2 in a stronger economy."
"Dana Corp. (NYSE, DCN, $40), a leading global manufacturer of automotive components and industrial equipment, survived a difficult 1991," notes United & Babson Investment Report.
"An ongoing cost-cutting program and strong internal management kept operating cash flow positive. While overall U.S. vehicle sales remain at a stubbornly low level, recent data indicate a pickup in the important truck market. Dana is a major original equipment supplier of transmissions, drive shafts and related components for utility vehicles and light trucks. We currently estimate 1992 earnings at $1.50 per share and look for further significant progress next year."
The R.H.M. Survey, Glen Cove, N.Y., has added Showboat (NYSE, SBO, $13.62) to its list of best buys.
"Prospects in Las Vegas and Atlantic City are improving monthly. Opened in March 1987, Showboat's Atlantic City facility is responsible for most of the company's operating revenues. The company's Las Vegas facility recently underwent a $28 million renovation and expansion. After a dreadful first half, affected by both the Persian Gulf War and a faltering economy, Showboat's two hotel/casinos have come to life. The Atlantic City complex saw operating profit jump 18 percent; the Las Vegas facility 25 percent."
"Mirage (NYSE, MIR, $34.75), formerly known as Golden Nugget, is about to embark on another major new project, adjacent to its world-famous Mirage property on the Las Vegas strip, United & Babson Investment Report.
"Called Treasure Island, it will contain 3,000 rooms and have a pirate theme. If history can be believed, it should be an overnight success after its likely opening in early 1994. Mirage and its CEO, Steve Wynn, have a track record of bringing in new projects on time and on budget. The Mirage resort is already the most profitable property of its kind in the world. . . . Per share earnings could surge to $4.50 to $5 a share by 1994-1995." HC mJB