Car Rental companies are a dime-a-dozen and are very sensitive to economic conditions as shown by the weak results from Dollar Thrifty (DTG) yesterday.
From Barron's yesterday: "Car rental companies have fallen sharply Monday, with Hertz (HTZ) and Avis Budget Group (CAR) in the wake of the profit warning from rival Dollar Thrifty (DTG) which issued a profit warning late Friday. Trying to sneak downbeat earnings guidance past this market is generally about as successful as trying to camouflage that ugly dent in the passenger-side door of the Fiesta you’re returning. Analysts are insisting the selloff of names like Avis is unwarranted, because, unlike Dollar’s leisure-travel market, Avis is a commercial-fleet operator, and thus not exposed to the same market conditions. No buyers for that argument, though."
I rented a car last spring to attend a wedding one weekend and was amazed how cheap the rental was. I may be wrong, but it seems to me like prices for car rentals have not changed much over the last few years.
Stick to investments in hotels and hotel REITS where there is differentiation among properties and greater control over the supply of hotel rooms in many competitive markets.
Bargain basement recommendations for hotel REITs include Felcor Suites (FCH) and Ashford Hospitality (AHT).
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