Storm The Castle: Avis Budget Group (CAR)

Trade-Ideas LLC identified Avis Budget Group (CAR) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Avis Budget Group

(

CAR

) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) 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 $91.9 million.
  • CAR has traded 348,302 shares today.
  • CAR is trading at 1.58 times the normal volume for the stock at this time of day.
  • CAR crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on CAR:

Avis Budget Group, Inc., together with its subsidiaries, provides car and truck rentals, car sharing, and ancillary services to businesses and consumers worldwide. The company operates through Americas and International segments. CAR has a PE ratio of 12. Currently there are 4 analysts that rate Avis Budget Group a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Avis Budget Group has been 2.7 million shares per day over the past 30 days. Avis Budget Group has a market cap of $2.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 2.50 and a short float of 20.6% with 6.97 days to cover. Shares are down 14.8% year-to-date as of the close of trading on Thursday.

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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, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 13.8%. Since the same quarter one year prior, revenues slightly increased by 1.7%. 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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 exceeds that of both the industry average and the S&P 500.
  • 42.90% is the gross profit margin for AVIS BUDGET GROUP INC which we consider to be strong. 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 -2.71% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Road & Rail industry. The net income has significantly decreased by 466.7% when compared to the same quarter one year ago, falling from -$9.00 million to -$51.00 million.
  • The debt-to-equity ratio is very high at 36.92 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, CAR maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.

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