Hotels and other unlock themes are usually the flavour of the season types of bets. These type of situations are easy to decipher for markets and hence most of the juice is out within some time, unless there is prolonged disbelief in the theme. The bets in hotel sector for me was one in which it took longer than expected to work out and not to the extent I had expected to work out. Part of the problem was that I was much earlier than what was prudent in these bets and hence had to watch the stocks go down and then now watch them go up.
I had put up the chart of Lemontree hotels where I had explained that 70-72 was a stiff resistance and now that is crossed, I think technically target was close to 84-85 and beyond that all time high around 90 and above.
But I cannot get my head around the valuations of these hotel stocks, so plan is to exit on visibility of froth, or when technical targets are achieved. In these kind of names, I find it futile to try to value them as its beyond my expertise to value them. But broadly if I catch an earnings upcycle, I would try to ride it out till visibility is clear. In case of hotels, I keep tabs on how bookings are faring, by keeping in touch with a friend who is a travel agent. The upcoming holiday season in near term, plus Diwali etc going ahead, should bode well for the hotel sector.
Only thing to watch out for these thematic bets is that many a times stocks tend to top out much before trouble is visible in actual fundamentals of the companies/sector in question.
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