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Today's Water-Logged And Getting Wetter Stock: Avis Budget Group (CAR)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Avis Budget Group (CAR) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Avis Budget Group as such a stock due to the following factors:

  • CAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $46.4 million.
  • CAR has traded 837,033 shares today.
  • CAR traded in a range 200.1% of the normal price range with a price range of $1.65.
  • CAR traded below its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in CAR with the Ticky from Trade-Ideas. See the FREE profile for CAR NOW at Trade-Ideas

More details on CAR:

Avis Budget Group, Inc., together with its subsidiaries, provides car and truck rentals, and ancillary services to businesses and consumers worldwide. CAR has a PE ratio of 921.5. Currently there are 4 analysts that rate Avis Budget Group a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Avis Budget Group has been 1.8 million shares per day over the past 30 days. Avis Budget Group has a market cap of $4.0 billion and is part of the services sector and diversified services industry. The stock has a beta of 2.58 and a short float of 12.9% with 10.88 days to cover. Shares are up 86% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Avis Budget Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • CAR's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 10.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, CAR's share price has jumped by 106.59%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The gross profit margin for AVIS BUDGET GROUP INC is rather high; currently it is at 50.38%. Regardless of CAR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CAR's net profit margin of 4.92% is significantly lower than the industry average.
  • The debt-to-equity ratio is very high at 14.95 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, CAR has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Road & Rail industry and the overall market, AVIS BUDGET GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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