10 Best Guru Stocks To Buy Now

3. Avis Budget Group, Inc. (NASDAQ:CAR)

Number of Hedge Fund Holders In Q2 2024: 33

Average Analyst Share Price Target: $126.57

Average Analyst Share Price Target Upside: 52%

Avis Budget Group, Inc. (NASDAQ:CAR) is a rental car company headquartered in Parsippany, New Jersey. Its stock hasn’t seen any love from Wall Street this year, with the shares down 52% year to date. The sell off started in February when Avis Budget Group, Inc. (NASDAQ:CAR)’s shares dropped by 23% in a move that underscored the importance of inventory management for rental car companies. During the Q4 2023 earnings, the firm revealed that inventory mismatches had forced it to sell cars in the used car market at a time when used car prices were low. While no one likes to sell in a bad market, Avis Budget Group, Inc. (NASDAQ:CAR) was forced to do so since it was dealing with higher interest costs per vehicle. However, moving forward, since the firm sold older vehicles, its inventory is now focused more on newer models which can allow Avis Budget Group, Inc. (NASDAQ:CAR) to gain customers on the back of a recovery in the travel industry. Other key factors that can help it in the future are its margins and a lower volume of range constrained EVs.

Avis Budget Group, Inc. (NASDAQ:CAR)’s management defended the inventory sale during the Q2 2024 earnings call:

“In fact, we have taken the necessary steps to adjust our fleet in the first half of the year by selling a record amount of vehicles, which allowed us to achieve utilization in the month of June in the Americas, more than a point above prior year, setting us up to be in a strong position to drive additional utilization and pricing benefits through our transition into the summer peak.

With the improved utilization, we focus on what we can control to strengthen pricing and reduce our overall holding cost. Our goal has been and always will be to ensure that our fleet is kept inside of our demand. And while the quarter shows our fleet size to be up 2%, we started July with fleet down over prior year.”