Three Outstanding Development Stocks With Potential to Outshine the S&P 500 by 2030
The robust market has propelled the S&P 500 by 22% over the past year, yet it typically averages around 10% annual returns. Over time, a stock's success is closely tied to the growth of its underlying business. In pursuit of beating the index, investors should look for companies with rapid revenue or earnings growth. Despite short-term fluctuations, these firms will likely perform better in the long term.
Three of Our Website's contributors suggest three stocks that could outperform the broader market: Uber Technologies (UBER), MercadoLibre (MELI), and Cava Group (CAVA). Here's why you should consider these stocks as long-term investments.
Exploding ride-hailing market
John Ballard highlights Uber Technologies. While the stock has experienced a 162% surge since 2022, it's now at a favorable buying level as it's barely above its 12-month performance. Uber's revenue growth accelerated by 20% in the third quarter of 2024, and operating income more than doubled compared to the previous year.
Uber's strategies for growth are paying off, particularly in its ride-hailing business, advertising, Uber One memberships, and market expansion. Although competition will increase, the ride-hailing market is expected to continue growing, making Uber a formidable competitor. Analysts forecast earnings to grow annually at 41%, suggesting that Uber stock could significantly outperform the S&P 500 as margins improve.
Twin powerhouse businesses in e-commerce and fintech
Jennifer Saibil advocates investing in MercadoLibre. While it has already outperformed the S&P 500 over the past five years, it only increased by 8% in 2024. The company's concerns regarding Argentina's economy are unfounded, as MercadoLibre's growth has continued unabated.
The company has a substantial opportunity, particularly in Latin America, where e-commerce still trails global averages yet is growing rapidly. In the third quarter of 2024, MercadoLibre reported a 71% increase in GMV, 21% growth in unique buyers, and a 35% increase in monthly active users. The company's innovative financial services, such as digital payments and credit solutions, have proven to be successful add-ons for its primary e-commerce business.
MercadoLibre's strong operational performance and massive untapped market potential make it an attractive long-term investment.
The next restaurant growth star
Jeremy Bowman presents Cava Group. Despite facing challenges in the consumer discretionary sector in 2024, Cava still managed to surge 162% in stock price, thanks to exceptional growth in revenue and profits.
Cava's unique Mediterranean-inspired food has resonated with consumers, who continue to patronize the chain at an impressive rate. The company's focus on profitability has also been crucial, as it has significantly improved restaurant-level profit and income under generally accepted accounting principles (GAAP) in the third quarter.
Additionally, Cava's ambition to grow beyond the initial 352 restaurants presents an exciting opportunity that could drive even more growth and investment returns. However, given that the restaurant sector is sensitive to economic conditions, this poses a risk that investors should be aware of.
These three stocks have proven themselves by outperforming the market and demonstrating significant growth potential. Although past performance does not guarantee future results, these companies' merits make them compelling investment options.
Investing in Uber Technologies (UBER) could provide excellent returns, as predicted by financial analysts who anticipate its earnings to grow annually at 41%, outperforming the S&P 500. This growth is attributed to Uber's robust ride-hailing market, advertising, Uber One memberships, and expansion efforts. (containing: investing, finance, money)
Uber's financial performance and market potential make it an attractive long-term investment for those willing to consider this growth stock. (containing: investing, finance, money)