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Car Rental Stocks Jump on Tech Partnerships

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Rental car companies have been struggling over the past year, but they could play a large role in the autonomous vehicle movement. Avis Budget Group, Inc. (CAR) recently signed a deal with Alphabet Inc. (GOOG​) to manage its self-driving car fleet. Under the deal, Avis will service and store Alphabet subsidiary Waymo’s fleet of 600 Chrysler Pacifica minivans in Phoenix beginning later this year. Investors are hoping that Avis will be able to leverage its nationwide presence to become a leading resource for autonomous vehicle operators to store and service their fleets.

On the same day that the Avis partnership was announced, Bloomberg reported that Hertz Global Holdings, Inc.’s (HTZ) SUVs were being leased by Apple Inc. (AAPL​) for autonomous vehicle testing. The California Department of Motor Vehicles’ records show that Apple will use Lexus RX450h SUVs for testing purposes. It is unclear whether there’s a longer-term deal between the two companies, but rental car companies may play a larger role in the autonomous vehicle space. (See also: Time to Buy Hertz at an 8-Year Low?)

Technical chart showing the year-to-date performance of Avis Budget Group, Inc. (CAR) stock

On a technical level, Avis Budget Group stock broke out from its 50-day moving average at $25.34 to upper trendline and R1 resistance at $29.24 before moving lower by the end of Monday. The relative strength index (RSI) appears overbought at 66.51, but the moving average convergence divergence (MACD) has made a steady recovery since early June.

Traders should watch for a breakout from R1 resistance to the 200-day moving average at $32.65 or R2 resistance at $35.60, or consolidation between the pivot point at $25.34 and R1 resistance before a significant move higher. While the stock has trended lower over the past year, Avis Budget Group’s deal with Alphabet/Waymo could set the stage for a reversal in the near term. (For more, see: Avis Budget Collaborates With Waymo for Self-Driving Cars.)

Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except in passively managed index funds.

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