We recently compiled a list of the 10 Stocks That Will Make You Rich In 2025. In this article, we are going to take a look at where Uber Technologies, Inc. (NYSE:UBER) stands against the other stocks that will make you rich in 2025.
What to Expect from the Stock Market in 2025
Jurrien Timmer, Director of Global Macro at Fidelity Management & Research Company, recently shared his outlook for the stock market in 2025. His analysis reflects cautious optimism, emphasizing potential growth and significant risks. Timmer described 2024 as a “Goldilocks” year for U.S. stock returns, characterized by robust earnings growth and rising valuations. The S&P 500 Index experienced a substantial increase, concluding the year with a gain of approximately 28% as it reached new all-time highs. This performance was driven by strong earnings from major companies, particularly the so-called “Magnificent Seven” stocks whose growth has significantly influenced the overall market dynamics.
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Looking ahead to 2025, Timmer maintained a bullish stance on stocks but cautioned that investors should not expect returns to match the spectacular gains of the previous two years. He noted that while earnings forecasts remain strong, especially for the mega-cap stocks, valuations are stretched, currently sitting in the 90th percentile historically. This suggests that significant further expansion in price-to-earnings (PE) ratios could lead to a bubble scenario, which he believes is unlikely. He expects continued earnings growth to support stock prices in 2025. However, valuations may limit future growth. Timmer suggests that earnings must drive performance rather than further valuation expansion to avoid a bubble scenario.
With the bull market entering its third year, Timmer describes it as being in “later innings,” indicating increased caution regarding future performance. He also suggested several risks that could potentially impact the market in 2025. For instance, heavy reliance on a few mega-cap stocks poses a risk; if these stocks falter, it could drag down overall market performance despite broader participation from other stocks. Secondly, although he does not foresee a return to the high inflation rates of the past decades, he warns that rising inflation could lead to higher interest rates, which would negatively affect the stock market.
Our Methodology
To compile the list of 10 stocks that will make you rich in 2025, we conducted a consensus. We sifted through various internet rankings to get an initial list of stocks expected to explode in 2025. Next, we sourced analyst sentiment for each stock from CNN and ranked our list in ascending order of the analysts’ projected upside potential for the next twelve months. Please note that the data was recorded on Friday, December 20, 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close up view of a hand holding a smartphone, using a ride sharing app.
Uber Technologies, Inc. (NYSE:UBER)
Analysts Upside Potential: 48.20%
Uber Technologies, Inc. (NYSE:UBER) is a technology company that operates a platform connecting users with various services including ride-sharing, food delivery, grocery, public transport integration, and freight services. The company operates in around 70 countries across the globe. Although the stock has dropped 12.70% over the past 6 months, its investment case remains robust and it ranks 6th on our list of stocks that will make you rich in 2025.
Goldman Sachs recently placed Uber Technologies, Inc. (NYSE:UBER) as one of its top picks for 2025 and analyst Eric Sheridan noted that the company’s risk-to-reward balance remains one of the most attractive ones going into 2025. He mentioned that the price fluctuation is merely due to the short-term debates concerning the rise of autonomous vehicles and its impact on mobility growth. However, Sheridan highlighted that he is more focused on the company’s long-term performance and its delivery regarding February 2024 Investor Day commitments.
Uber Technologies, Inc. (NYSE:UBER) performed well during the fiscal third quarter of 2024. It achieved a 20% year-on-year increase in gross bookings when adjusted for constant currency, reaching approximately $41 billion during the quarter. It also generated an all-time high GAAP operating profit of over $1 billion, marking a substantial milestone in its financial trajectory. In addition, the company now boasts over 161 million monthly active users, with a notable increase in trip frequency. Moreover, to tackle any potential threats from the rise of autonomous vehicles, management is collaborating with 14 partners to enhance deployment plans for autonomous technology, which is expected to add significant value to their operations.
RiverPark Large Growth Fund stated the following regarding Uber Technologies, Inc. (NYSE:UBER) in its first quarter 2024 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was a top contributor in the quarter following better than expected 4Q23 earnings and 1Q24 guidance. Gross bookings of $37.6 billion were up 22% year over year. Mobility gross bookings of $19.3 billion grew 29% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $17 billion were up 19% from last year and continued to be strong throughout the quarter. 4Q Adjusted EBITDA of $1.3 billion, up $618 million year over year, was better than management’s guidance of $1.2 billion, and the company generated $768 million of free cash flow, up from a cash loss of $303 million last year. Management guided to continuing growth in 1Q Gross Bookings (20% growth) and Adjusted EBITDA (of $1.3 billion). The company hosted a well-received analyst day in February during which it guided to three year compounded annual growth rates for gross bookings of mid-to-high single digits and EBITDA of 30-40%, both above investor expectations. The company also guided to free cash flow conversion of 90% of EBITDA.
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than a ride sharing and food delivery service; we also see it as a global mobility platform with 142 million users (by comparison, Amazon Prime has 200 million members) and the ability to penetrate new markets of on-demand services, such as package and grocery delivery, travel, and hourly worker staffing. Given its $5.4 billion of unrestricted cash and $4.8 billion of investments, the company today has an enterprise value of $165 billion, indicating that UBER trades at 21x our estimates of next year’s free cash flow.”
Overall UBER ranks 6th on our list of the stocks that will make you rich in 2025. While we acknowledge the potential of UBER as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UBER but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.