Investing some money in US-listed growth stocks can pay off. Just ask anyone who bought Tesla, Amazon, or Nvidia shares a decade ago.
Here, I’m going to highlight a US stock that I’ve been buying for my own portfolio recently. I think it has the potential to deliver enormous gains over the next decade.
It’s a verb
The stock I want to highlight today is Uber Technologies (NYSE: UBER).
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Most people probably know of the company already. It’s one of largest providers of rideshare/mobility services in the world with around 130m users across approximately 70 countries.
An industry leader, the company is so dominant that its name has become a verb.
Why I’m bullish
There are many reasons I’m bullish on Uber right now.
For a start, the company’s profits are soaring. For 2024, analysts expect the group to generate net income of $2,472m. That’s more than triple the number forecast for 2023 ($802m). There are not many large-cap stocks delivering that kind of profit growth.
Second, the group has recently moved into digital advertising and is now showing ads in both its apps and its vehicles (with 130m people using its app, it has ta powerful platform for advertising). Digital advertising is a hugely profitable industry so this move is likely to boost Uber’s revenues and profits significantly in the years ahead.
I also like the fact that the stock was recently added to the S&P 500 index. This should increase demand for it from institutional investors. It’s worth noting that Uber has been placed within the Industrial sector. Given this classification, I think it will appeal to a lot of fund managers.
Finally, Uber is now rolling out self-driving taxis in the US thanks to its partnership with Alphabet’s Waymo. I think we’re likely to see much more of this going forward. Taking a longer-term view, I feel self-driving cars could push Uber’s profits (and share price) up dramatically.
A no-brainer growth stock?
Now, the shares have had a big run recently. As a result, there’s always the chance of a pullback in the near term.
And that’s not the only risk here.
A P/E ratio of near 50 also adds some risk to the investment case (although the P/E-to-growth — or PEG — ratio is quite low).
As does regulatory uncertainty. In recent years, Uber has faced regulatory challenges in a number of markets and we may see more of this in the years ahead.
Overall though, I’m very excited about the potential here.
With a market cap of just $125bn today (about one sixth of Tesla’s), I see a lot of potential for share price growth in the long run.
Ultimately, Uber strikes me as the kind of stock that people will look back on in 2033 and think ‘why didn’t I invest in that company a decade ago?’ I see it as definitely worthy of research.
