Under $10 Stock Hertz Global Sees 43.9% Surge: Time to Buy?

Despite the stock market reeling under tariff pressure, vehicle rental company Hertz Global Holdings, Inc. HTZ emerged as a top gainer on Thursday, gaining momentum in share value. What caused Hertz’s stock price to increase, and is now a good time to consider buying the stock? Let’s delve into this. Why Did Hertz Global Stock Shoot Up on Thursday? Hertz’s business has been struggling lately, with the company reporting a loss of nearly $2.9 billion in 2024. A decrease in the price of electric vehicles purchased in 2021 and vehicle depreciation caused the loss.  However, the CEO of Pershing Square Capital Management, Bill Ackman, is optimistic about Hertz’s prospects as he has built a 19.8% stake in the company. Since late 2024, he has accumulated a stake of 12.7 million shares. This makes one wonder what the hedge fund manager sees in the stressed company? Ackman expects Hertz to look beyond a bad investment in Tesla Inc.’s TSLA electric vehicles and make the most of higher used-car prices resulting from the Trump administration’s tariffs on U.S. auto imports.  Automakers such as Volkswagen and Audi may stop imports to avoid the 25% levies. But the increase in availability of used cars may drive up the prices due to higher demand. Ackman stated that with over 500,000 vehicles valued at nearly $12 billion, a 10% increase in used car prices would result in a $1.2 billion rise in auto assets for Hertz. Ackman is also optimistic about management’s capability to turn around the company. He believes Hertz’s CEO, Gil West, has the wherewithal to manage the company’s debt load, curtail operating expenses, increase unit revenue, and boost profit margins in the coming years.   Ackman’s big bet on the rental car company helped Hertz’s shares soar almost 44% in New York trading on Thursday. The company’s shares have now more than doubled in value in the last two trading sessions. On Thursday, HTZ shares touched an all-time high of $8.74 before closing the day at $8.22. Its shares have surged 125.2% year to date, in contrast to the Transportation - Services industry’s loss of 9.2%. Image Source: Zacks Investment ResearchShould You Buy HTZ Stock Now? Ackman’s big bet boosted the stock price of Hertz. However, fundamentally, the rental business still incurs high fixed costs for fleet and vehicle depreciation, with no significant changes.  Moreover, despite Ackman’s confidence, the long-term prospects are grim for Hertz amid economic uncertainty. Consumer sentiment has soured due to tariffs, leading to reduced travel spending and negatively impacting rental companies like Hertz. Hertz has also not been able to generate profits proficiently. This is because its net profit margin is a negative 31.6%, whereas the industry average is 1.2%.  Image Source: Zacks Investment ResearchTherefore, Hertz has a Zacks Rank #4 (Sell), and the Zacks Consensus Estimate of -$1.30 for HTZ’s earnings per share (EPS) is down by -864.7% from a year ago. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here. Image Source: Zacks Investment ResearchZacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hertz Global Holdings, Inc. (HTZ): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks