Now is not the time to be taking imprudent risks in the market. True, the S&P 500 has rebounded strongly from its mid-October lows. But the September peak at 2,019 may present formidable resistance. That’s about 25 points away, and the index has come very far very fast.

In this tricky environment, I am looking for stocks that meet two important criteria: 

1. Double-digit revenue and earnings growth projections; and
2. A rock-solid technical picture with no nearby resistance looming overhead.

Strategic Hotels & Resorts (NYSE: BEE) fits the bill. The real estate investment trust (REIT) operates high-end hotels like Fairmont, Marriott and Westin.

#-ad_banner-#Industry trends are bullish. Business and leisure travel are growing, and hotel occupancy rates are in an uptrend.

In August, the U.S. hotel industry’s occupancy rate climbed 3.8% year over year to 71.6%, according to Smith Travel Research. Year to date, the occupancy rate is at 66% — the highest in 17 years.

PricewaterhouseCoopers (PwC) expects this trend to continue. Demand for hotel rooms is forecast to rise 4% for 2014, with available supply growing just 1%. 

Increased demand coupled with low supply, should create a favorable environment. And higher occupancy rates will give hoteliers pricing power, allowing them to increase rates.

Strategic Hotels & Resorts is scheduled to report earnings on Nov. 3. If history is any guide, the company should impress. In the past four quarters, it has beaten earnings expectations by an average of 20%.

Analysts estimate third-quarter earnings will jump 50% from the same period a year ago, to $0.21 per share, on a nearly 25% increase in revenue to $296.6 million.

For the full year, earnings are projected to surge 56% to $0.67 per share on an 18% rise in sales to almost $1.1 billion.

Shares have been in a major uptrend since November 2012, gaining 130% to date. 

Although its ascent is marked by two periods of prolonged consolidation, BEE has held the major uptrend line for two years.

Shares broke to new highs every day for the past week. At $12.67, BEE is trading at the highest levels seen since 2008. 

There is some resistance marked by the intersection of a channel line, currently near $14.25. This would be the first upside target. If shares break through this resistance, they could challenge their all-time highs near $23, made in March 2006 and May 2007, since there would be little resistance in the way. I’m placing my target at $15.95, 26% above current prices.

Risks to consider: Strong demand for hotels is currently anticipated. That picture could change if the national security situation worsens or fears of Ebola keep travelers close to home. However, this luxury hotel REIT has a global presence. Even if bookings were to decrease in one region, as a whole, BEE should continue to perform well.

Recommended Trade Setup:

— Buy BEE at the market price
— Set stop-loss at $10.89, below current trendline support
— Set initial price target at $15.95 for a potential 26% gain by early 2015

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This article originally appeared on ProfitableTrading.com: Low-Cost Luxury Hotel REIT Set to Deliver 25%-Plus Profits