of Bull market He pushed that. S&P 500 Last year it increased 22%, but historically, the popular barometer returns an average of 10% every year. One strategy to beat the index is to invest in companies that have high growth in earnings or revenue. Stocks can fluctuate in the near term, but there is a close correlation between a stock’s long-term performance and the growth of the underlying business.
Three Motley Fool contributors are here to help you in your search Uber technologies (NYSE: UBER ), Mercado Libre (NASDAQ: MELI)And Kava group(NYSE: CAVA ) Long-term winners have innovations that can dominate the broader market over the next five years. Here’s why.
John Ballard (Uber Technologies): Uber stock is up 162% in 2022, but the stock’s flat performance over the past year sets up a good buying opportunity. Another year of strong growth in the business has brought the share price down to an attractive level, setting up good return prospects.
Company card for Uber Technologies NYSE:UBER
Uber is laying the groundwork for long-term growth in the business, and it shows in 2024. Revenue growth accelerated, rising 20% year over year in the third quarter. What’s more, the increase in revenue is driving a significant improvement in profits, with operating income more than doubling from the previous quarter to $1.1 billion.
That acceleration can be attributed to several trends, including more people using Uber, strong growth in advertising, increased Uber One memberships and expansion into new markets.
In the long term, Uber faces increasing competition, but the ride-hailing market is expected to grow significantly in the coming years. As a leading brand, it will be a strong competitor, and investors will be able to buy shares at a very attractive price that will keep potential for huge returns.
The stock trades at just 20 times 2025 earnings estimates, with analysts predicting annual revenue growth of 41 percent. As the company improves margins, Uber stock could significantly outperform the S&P 500.
Jennifer Cybill (Mercado Libre): Mercado Libre stock has outperformed the S&P 500 over the past five years, but is up just 8% in 2024. Wall Street is worried about the economy in Argentina, Mercado Libre’s biggest market. But so far, the company has continued to show incredible performance, and it has a great opportunity to continue.
E-commerce penetration in Latin America, where Mercado Libre operates, is still lower than in other global regions, but it is growing rapidly, and this is the company’s sweet spot. Gross merchandise volume (GMV) increased 71 percent year over year (on a currency-neutral basis) in the third quarter, and net income increased 103 percent.
Unique buyers grew 21 percent year-over-year to 61 million, and monthly active users increased 35 percent. Third-quarter profitability was hurt by bad debt, but the company still reported a net income margin of 7.5%.
These are not unusual results. MercadoLibre has consistently shown high growth, but operating in underserved territory, the opportunity to open up is huge. It serves over 500 million people and its innovative products are disrupting traditional financial services and attracting customers.
It also has a strong fintech and lending business that complements its business with digital payments and financial solutions. In the third quarter, assets under management increased 93% year over year, and the loan portfolio increased 77%. The company now offers a full range of financial services through a digital app, and is launching its first banking products in Mexico, aiming to become the country’s largest digital bank.
Short-term pressure on margins may persist, but business is better with more new customers in Argentina than at the height of the pandemic, where e-commerce has picked up steam. Over the next five years, Mercado Libre should be able to continue its outstanding performance, capture market share, expand its business and reward investors.
Jeremy Bowman (Cava Group) Kava was one of the biggest surprises of 2024. In a challenging year for consumer choice stocks, restaurant chain shares 162% jumped Explosive growth on the top and bottom lines.
The stock has bounced back from a record high following its third-quarter earnings report in November and now offers a better entry point.
The Mediterranean fast-casual chain looks like a good bet to outperform the S&P 500 over the next five years for several reasons. First, the product clearly resonates with consumers. Average unit volumes, or average sales per restaurant, are now $2.8 million, on par with such popular chains. Chipotle And Sweet green. The company reported same-store sales growth of 18.1% in the third quarter with traffic growth of 12.9%.
Such development is not the only one. Kava is spreading the word to friends and generating buzz among customers who return to the restaurants again and again.
It is turning increased demand into profit. Restaurant-level profit rose 41.9 percent to $61.8 million in the third quarter, and generally accepted accounting principles (GAAP) earnings rose to $18 million from $6.8 million.
Cava still has a long runway for growth, as it had just 352 restaurants at the end of the third quarter and hopes to own more than 1,000 by the end of the decade. However, if the concept continues to resonate, there’s a chance the chain could grow to several thousand locations.
Chipotle currently has more than 3,000 locations and has a goal of at least 7,000 Shake Shake He raised the target from 450 to 1,500.
The ceiling is high for Kava. If the company keeps up its momentum, the stock could easily double or triple by 2030.
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Jennifer Sybil MercadoLibre has locations. Jeremy Bowman It has locations in Chipotle Mexican Grill, MercadoLibre and Sweetgreen. John Ballard MercadoLibre has locations. He has spots in the Motley Fool and recommends Chipotle Mexican Grill, MercadoLibre and Uber Technologies. The Motley Fool recommends Cava Group and Sweetgreen and recommends the following options: Short December 2024 $54 puts on Chipotle Mexican Grill. The Motley Fool has Disclosure Policy.
