Best Car Rental Stocks: Zipcap Plus Hertz and Avis Battle For Dollar Thrifty – CAR, DTG, HTZ, ZIP

Rental car groups Hertz Global Holdings (NYSE: HTZ) and Avis Budget Group (NasdaqNM: CAR) are upping the stakes in their year long battle for control of the Dollar Thrifty Automotive Group (NYSE: DTG). The reason: Hertz and Avis largely cater to business travellers while leisure travelers are the core customers for Dollar Thrifty.

Hence and on Monday, Hertz upped the offer for Dollar Thrifty to $72 a share in both cash and stock – making a potential deal worth $2.25 billion. Dollar Thrifty has stated that they will review the Hertz buyout offer but investors are already betting that the bidding will go higher.

It should also be noted that rental car industry has been in consolidation mode for some time now as in 2002, the parent company of Avis bought Budget while the parent company of Enterprise acquired both Alamo and National in 2007.

Hence, rental car company investors might also want to take a look at Zipcar (NasdaqNM: ZIP). Founded in 2000, Zipcar is a Cambridge Massachusetts headquartered company that operates a 560,000 member car sharing network in major metropolitan areas plus on university campuses in the USA, Canada and the UK. Zipcar members have access to self-service fuel efficient and green vehicles parked in reserve parking spaces in the neighborhoods where they live, work or study – a very unique and interesting business model that is not particularly profitable (and its already being copied by Hertz).

In fact and when Zipcar went public on April 14, they noted in their IPO prospectus that they have experienced net losses for every year since 2000 and they have no idea when their business operations will actually become profitable. Nevertheless, Zipcar recently closed at $27.87 and has a trading range of $23.50 to $31.50 – thanks in large part to rumors it’s a takeover candidate and the battle over Dollar Thrifty.

Meanwhile, Hertz recently closed at $16.68 and has a 52 week range of roughly $8.3 to 17.60; Avis just closed at $18.47 and has a 52 week range of $8.50 to $19.50; and Dollar Thrifty closed at a new high of $79.27 and has a 52 week low of $40.53.

The bottom line: The battle between Hertz and Avis over Dollar Thrifty is clearly benefiting all rental car company stocks while investors might want to take a closer look at Zipcar as a takeover candidate once the Dollar Thrifty battle is settled but driver beware of the company's business model and potential for profits.