Hotel stocks Hilton Worldwide Holdings Inc. (HLT), Marriott International Inc. (MAR) and Extended Stay America Inc. (STAY)—which benefit from generous cash flow and efficient business models—are poised to climb 20% in 2018 even if the U.S. economy grows only 2%, according to a Nomura Instinet note reported on by Barron's. (For more, see also: Hotel, Cruise Stocks Are Booming Amid Trump Travel Ban.)

The note, written by Harry Curtis, as well as other analysts, argued that the broader industry, which benefits from rising corporate profits, lower vacancies and CEOs who are confident, could have stronger pricing power, according to Barron's. While the analysts who composed the note stated that difficulty in Washington is providing the broader industry with headwinds, they asserted that the hotel stocks mentioned will likely return significant cash to shareholders.

Hilton Worldwide

Hilton Worldwide, whose stock recently hit an all-time high, commands a market capitalization (market cap) of nearly $21 billion, according to Google Finance. Over the last five years, its sales growth has averaged 5.8%, Economics and Money reported. Currently, the company's stock has a price-earnings ratio of roughly 565, which is above the industry average.

Marriott International

Marriott International, whose stock hit an all-time high earlier this year, has a market cap of more than $35 billion at the time of report, according to Google Finance. The company, whose earnings are expected to grow in the coming quarters, has had leveraged free cash flow of $1.86 billion over the last 12 months, Stock News Journal reported.

Extended Stay

Extended Stay, a smaller company, has had leveraged free cash flow of $240.55 million over the last 12 months and currently holds $77.56 million worth of cash on its books, according to a separate article by Stock News Journal. Currently, the company's market cap of roughly $3.7 billion makes it significantly smaller than Hilton and Marriott.

Strong Outlook

Going forward, all three of these companies are well positioned to improve their fundamentals, wrote Curtis, according to Barron's.

"HLT, MAR, and s-mid cap STAY should grow annual free cash/share by at least 13% through 2019 in a 2% GDP environment, about 2 times higher than the S&P consumer discretionary sector ex-internet," they wrote, Barron's reported. "Versus the consumer discretionary sector ex-internet, though, growth in lodging free cash flow is 2 times higher. Furthermore, HLT and MAR’s more resilient fee-driven EBITDA should be less volatile during weaker parts of the business cycle, which should justify a premium valuation."

The analysts wrote that even if multiples don't improve, investors should expect the prices of the aforementioned stocks to climb more than 20% from their current levels, according to Barron's. (For more, see also: Top 5 Most Profitable Hotel Companies.)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.