#7 - AVIS Budget Group (NASDAQ:CAR)
Another travel stock that has recently cracked its way into positive territory for 2020 is Avis Budget Group (NASDAQ:CAR). Once again, at the surface level, this seems like a smart play. After all, air traffic and rental cars go hand-in-hand. But it’s important not to get carried away with a sector that faces an existential threat.
Thus far, Avis has done a good job of cost-cutting to fend off a bankruptcy situation. But if the business doesn’t improve soon, investors may get impatient with accounting maneuvers being a substitute for actual revenue.
However, while Avis is not Hertz (NYSE: HTZ), the rental car industry faces a challenge from ride-hailing services. And it’s a battle that they were losing before the pandemic. The flight of urban commuters out of the cities and the possible shift to work-from-home for millions of Americans may change business travel's fundamental nature.
Simply put, ask yourself this question. Is there enough activity in the rental car sector to justify an over 100% increase in CAR stock in the last six months?
About Avis Budget Group
Avis Budget Group, Inc, together with its subsidiaries, provides car and truck rentals, car sharing, and ancillary products and services to businesses and consumers in the Americas, Europe, the Middle East and Africa, Asia, and Australasia. It operates the Avis brand, that offers vehicle rental and other mobility solutions to the premium commercial and leisure segments of the travel industry; and the Zipcar brand, a car sharing network, as well as the Budget brand, a supplier of vehicle rental and other mobility solutions focused primarily on more value-conscious customers comprising Budget car rental, and Budget Truck, a local, and one-way truck and cargo van rental businesses with a fleet of approximately 19,000 vehicles, which are rented through a network of dealer-operated and company-operated locations that serve the light commercial and consumer sectors in the continental United States.
Read More - Current Price
- $102.67
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $133.13 (29.7% Upside)
The emergence of several Covid-19 vaccines is creating one of the most important market catalysts, hope. And investors who are fueled by hope can outlast the harshest of bear forecasts. But now is a time when it’s important not to get caught up in irrational exuberance.
Overall, the market appears to be a little ahead of the actual economy. Some stocks are due to pull back. And whether you believe in technical analysis or not, some of the charts send the same message.
That means that it’s not unlikely that many stocks that got overheated in 2020 may come down to earth in 2021. And with many attractive stocks to choose from, it’s best to aim for quality stocks as you position yourself into the new year.
Many of the stocks in this presentation may have a bullish long-term story. But as the economy begins to reshape itself after one of the most disruptive years in our lifetimes, it’s important to make sure your portfolio is positioned in the right sectors.
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