Avis Budget Group Inc (CAR - Get Rating) is a provider of automotive vehicle rental and car-sharing services. The company’s brands include Avis, Budget, and Zipcar. Avis targets the premium commercial and leisure segments of the travel industry, while Budget is focused on value-conscious customers.

The company has been enhancing its technology and improving its offerings. For instance, CAR is looking to simplify customers’ online interaction to make the reservation, pick-up and return process easier. CAR is also working on expanding its connected vehicles fleet. This will allow it to streamline operations and cut costs.

CAR had $576 million in cash on hand at the end of the most recent quarter compared to very little short-term debt. Management is also quite efficient judging by its return on equity of 220.3%. While sales are down over the past year, earnings are forecasted to soar 118.6% this quarter.

Its stock is undervalued based on its trailing P/E of 9.2 and appears fairly valued based on its forward P/E ratio of 22.73. The stock has shown bullish momentum and is up 132% for the year as reflected in the chart below. This has led to a Momentum Grade of B in our POWR Ratings system.

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Take a look at the 1-year chart of CAR below with added notations:

Chart of CAR provided by TradingView

CAR had a great start to 2021, but the stock has recently hit a wall at the $90 level (red). That barrier is also preventing the stock from hitting new 52-week highs. A solid close above that $90 mark should lead to much higher prices for the stock.

CAR has a 52-week resistance at $90. The possible long position on the stock would be on a breakout above that level with a protective stop placed under it.

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Christian Tharp, CMT

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CAR shares fell $1.63 (-1.88%) in premarket trading Thursday. Year-to-date, CAR has gained 129.22%, versus a 12.12% rise in the benchmark S&P 500 index during the same period.

About the Author: Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...

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