For one thing, consolidation has been the name of the game in the rental car industry for the better

Hertz Hits the Gas With Dollar Thrifty Buy Dan Burrows, InvestorPlace Feature Writer Hertz has snatched up Dollar Thrifty for $2.3 billion, giving it a leg up over competitor Avis in the car rental industry.
post market-insight credit cards that give airline miles 08/27/2012 2012-08-27 credit cards that give airline miles 12:09:53 08/27/2012 markets, hertz dollar thrifty, hertz acquisition, htz, dtg, avis, car, car rental industry, mergers and acquisitions, hot stocks, mergers acquisitions
That s good news for Dollar Thrifty shareholders, who ve seen their stock soar ever since the company was put in play. Three years ago, the budget car rental company was trading at about $25. Dollar Thrifty got a huge leg up a couple years ago when Avis first offered $41 a share for the company. Anyone who stuck with Dollar Thrifty over that period is looking credit cards that give airline miles at a gain of about 270%.
The deal is also good news for Hertz, as it adds instant scale and an entirely different segment of customers to its business. Hertz is the second-biggest car rental company after privately-held Enterprise and caters mostly to business travelers. Dollar Thrifty, the No. 3 player, serves the leisure-travel and budget-customer credit cards that give airline miles business. Folding the latter into the former transforms Hertz into a much more formidable global player.
The transaction provides Hertz instant scale with two new, well-established brands with airport concession infrastructure in the mid-tier value segment. We'll be a stronger global competitive player not only in the U.S. but in Europe and other markets, given Dollar Thrifty's strong international presence.
And all of this will push Avis into the No. 3 position, credit cards that give airline miles leaving it in the dust by quite a stretch. Enterprise, with 38% of the U.S. market, is by far the biggest player. After adding in Dollar Thrifty, Hertz will jump to almost 24% from 18.9% market share. And Avis, formerly neck and neck with Hertz, will lag behind at about 18.5% market share.
For one thing, consolidation has been the name of the game in the rental car industry for the better part of a decade. There used to be nine big independent names now there will be just three. And since Enterprise is privately held, only Hertz and Avis offer traders and investors a way to bet on this sector of the travel business.
credit cards that give airline miles Furthermore, Avis has been one heck of a holding in 2012. Yes, it s been brutally volatile. With a beta of more than 3, it s more than three times more jumpy than the S P 500. But it also has gained about 50% for the year-to-date. Hertz, with a 12% gain, has only matched the performance of the S P 500, while Dollar Thrifty tacked on 15%.
Avis also looks to offer investors a compelling valuation at current levels. The stock trades at a forward price-to-earning multiple of just 6, or a 50% discount to the broader market. But Wall Street forecasts a long-term earnings growth rate of 15% for Avis or about 50% better than the S P 500.
Increased competition and the sluggish recovery do add a great deal of uncertainty to its stock prospects there s no question that Avis really will have to try harder. But now that the overhang of further industry consolidation credit cards that give airline miles has been lifted, at least management and the market can turn their attention back to the fundamentals.
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