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Hertz Global Holdings: Buy The Turnaround

Josh Rudnik profile picture
Josh Rudnik


  • HTZ is breaking out higher.
  • Management is leading a strong turnaround effort.
  • I am buying stock in the name.

Hertz Global Holdings (NASDAQ:HTZ) is attempting to turn around its operations after years of struggling and price declines. Its stock price looks to have formed a bottom, with recent upward price momentum near its financial crisis lows. Management is turning around its fundamental operations, focusing on in-demand services, while also managing operational efficiencies. I am buying stock in the name as a potential long-term turnaround play.

Price Action

HTZ's share price declined significantly in recent years as its operations deteriorated and its relative debt load increased. Investors pushed shares down from roughly $120, to under $20. Changes in management though, have led to a turnaround in HTZ operations since mid-2017. This led to a bottoming pattern around levels not seen since the financial crisis.

Considering the improving fundamentals, HTZ's recent breakout higher, following a period of consolidation, is significant. $21.5 had acted as a price resistance point over the last month, which was surpassed on Thursday afternoon. I am buying stock in the name following the break higher, with a stop-loss point at $20. The company's turnaround effort is in its beginning phases but looks to be gaining traction. This makes it an attractive risk/reward investment currently.

Fundamental Narrative

HTZ is attempting to turn around its operations by capturing more profitable trends, while also improving operational efficiency. Over the last quarter, the company improved on satisfying customer fleet preference, enhancing service quality, while developing brand strategies to secure new and more frequent renters, according to its earnings call. HTZ's progress is beginning to show up in its results, with the second half of 2017 achieving higher year-over-year U.S. rental pricing, utilization rates, revenue per unit and customer service scores, as well as lower monthly depreciation per unit. This momentum is broad-based across the organization, leading to increased investor optimism, and thus, share price appreciation.

This article was written by

Josh Rudnik profile picture
I am currently a portfolio manager at an RIA in Philadelphia with over $1 billion in assets. The portfolio is dedicated towards macro themed positioning with equities, ETFs, fixed income, as well as options and other alternatives. There are opportunities everywhere, both on the long and short side, and I aim to generate absolute returns on an annualized basis for clients. My absolute return portfolio has returned double-digit percentage returns over the last decade regardless of if the market is selling off, or rallying higher with enthusiasm. Relative returns are nice, but at the end of the day, you can't eat relative returns. When the S&P 500 is down 20%, it doesn't necessarily mean you have to be down too. Join my Marketplace service, Absolute Returns, and see how I am positioning my portfolio in real-time, and what trade ideas are coming about daily. I also offer a live chat as part of the service, where questions and ideas can be discussed.

Analyst’s Disclosure: I am/we are long HTZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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