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3 Surprising (and Surprisingly Cheap) Hot Growth Stocks

High-quality names. Accelerating profits. Bargain-basement prices.

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Avis Budget Group

avislogoForward P/E: 10
Long-Term Growth Rate: 31%
ROE: 28

The car-rental agency that tries harder has served up market-crushing results for the year-to-date, and there looks to be more upside down the road.

Avis Budget (CAR) has taken its lumps this year. Weakness in Europe and Australia — as well as higher fleet costs — caused it to cough up some ugly second-quarter results. A tepid forecast and a profit warning from rival Hertz (HTZ) were no fun either, but at least they’ve helped keep the valuation compelling.

CAR goes for 10 times forward earnings — well below the five-year average of 12.5, according to data from Thomson Reuters Stock Reports — despite having a long-term growth forecast of 31%. Multiple expansion alone should fuel the stock, which has hardly stalled in 2013 even amid disappointing news. Shares are up 43%, outpacing the S&P 500 by 27 percentage points.

A word of warning, though: Investors in CAR are in for a bumpy ride. With a beta of 2.6, the stock is about two-and-a-half times more volatile than the broader market.

Article printed from InvestorPlace Media,

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