PEG Ratio (Five-Year Expected): 0.42
Projected Five-Year Earnings Growth: 31%
Avis (CAR) has already climbed 60% during the past year, and that’s despite a roughly 15% drop in the past three months thanks to a Q2 revenue miss and earnings plunge.
But that recent pullback should be sweet music for longer-term investors, because CAR is looking like a growthy bargain.
Yes, Avis’ earnings are slated to drop 9% this year, but that should set a nice floor for future growth. In 2014, earnings are expected to improve by nearly 27% year-over-year, and current estimates peg Avis at 31% earnings growth annually through 2018.
That big-time growth, combined with the recent selloff, has Avis shares trading at a mouth-watering PEG ratio of 0.42. That’s lower than rival Hertz (HTZ) at a PEG of 0.59, and Amerco (UHAL) — the name behind U-Haul — is trading for a PEG north of 1. (Plus, Avis also bests both Hertz and Amerco in traditional P/Es.)
No wonder analysts have a median price target of $34 on the stock right now, which translates to 25% upside.