Last year, retail traders piled into shares of Hertz Global (HTZZ) as the company was still in bankruptcy. With the company largely in limbo due to the pandemic’s uncertainty regarding business and leisure travel, the notion of investors buying in seemed ridiculous.
But those investors are having the last laugh. They pushed the share price higher, allowed the company to issue more shares and pay down debt, and now the world is facing a shortage of cars rather than a surplus.
Last week, the car rental agency even announced that it was planning on buying 100,000 vehicles from Tesla Motors (TSLA), a move indicating current demand, and a change for the travel industry by offering EVs for rental use. They may even offer cars for rent for the rideshare industry as well.
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Shares are now double off their lows from earlier in the year, and are now about flat since exiting bankruptcy. There’s likely more room ahead, given the company’s transformation and moving the sector forward with the latest tech.
Action to take: Shares look attractive here, trading at about 20 times forward earnings. Travel demand remains robust, with revenues up 125 percent in the past year. Investors may like shares here for gains fueled by the company’s operational rebound.
Traders will have to stick with shares as well, given that options aren’t trading yet, and likely won’t until several weeks after shares move back onto a major exchange.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.