Sometimes, you have a company like Uber (NYSE:UBER
) that comes along and creates an innovative product or service which makes it difficult to imagine what life was like before it. If you aren’t familiar with this company, Uber provides a ridesharing application that offers a quick and convenient way to help people get from point A to point B and has essentially deemed taxis obsolete. Those that have spent time in taxis before are probably are familiar with their shortcomings. Flagging down a taxi can be difficult, especially during rush hour traffic or if you are in an obscure location. Taxi drivers often complain about short-distance trips and charge their customers by the mile, which means that, unlike Uber, riders don’t know how much they will pay until the end of the trip.
Now, people in need of a ride can simply connect with a driver on Uber’s application in minutes and hit the road. It’s clear that Uber Technologies is a unique business that created a truly revolutionary transportation platform, and there are several compelling reasons to consider adding shares at this time. Let’s take a deeper look below. Record Demand for March 2021
One of the main causes for concern about Uber over the last year is the fact that the pandemic has put a major dent in the company’s ridesharing volumes. With people prioritizing social distancing and safety for the majority of 2020, Uber’s earnings saw major declines. The company’s trips were down 27% year-over-year in 2020 which ended up being a drag on revenue and EBITDA. However, as more people get vaccinated and the world starts to reopen
, there are plenty of reasons to be optimistic about Uber trip volumes rebounding in 2021 and beyond.
We are already seeing some encouraging signs that a recovery is on the cards. This week, Uber announced that it had the highest total gross bookings in March 2021 in a single month since the company started back in 2009. The company is also spending $250 million on bonuses to boost the number of drivers that are available in the short term. In Uber’s Q4 earnings report, gross bookings grew 16% quarter-over-quarter to $17.2 billion, which could be another sign of good things to come. The bottom line here is that Uber is poised to rebound sharply as the pandemic subsides, which is a strong bull case for owning the stock. Surging Uber Eats Business
Another strong reason to consider adding shares of Uber at this time is the fact that its Uber Eats business has been thriving and will likely be a growth driver for many years to come. As a reminder, Uber Eats is an application that offers contactless deliveries for restaurant takeout, groceries, and more. It’s a bit ironic that one side of the company’s business model was hurt badly by the pandemic while the other side saw huge growth, but just imagine this company’s potential when both Uber Eats and its ridesharing platform are firing on all cylinders.
Uber Eats posted record monthly bookings in March and the company’s recent acquisitions of Postmates and Drizly should be viewed as a statement of intent to become the leader in delivery services. What’s great about Uber Eats is that everyone who has downloaded the Uber
ridesharing application has immediate access to food delivery services. Delivery revenues were up 224% year-over-year to $1.4 billion in Q4 2020, and if the company can grow its grocery and alcohol delivery volumes there’s even more upside for this business segment. Strongest Brand in Ridesharing
When it comes to owning a ridesharing company, why wouldn’t you want to own the most recognizable name in the industry? Sure, there are competitors out there that could take some of Uber’s market share in the future, but the truth is that when people think of ridesharing they think of Uber. There’s something to be said about owning a strong brand name for the long term, and this company fits the bill.
Uber currently operates in over 63 countries with over 110 million users that order rides or foods at least once per month. The company’s biggest competitor, Lyft, only has about 32% of the U.S. market share compared to Uber’s 68% based on February 2021 sales. It’s also worth noting that very few customers use both Uber and Lyft
, which tells us that the company’s market share should remain strong for years to come.
Featured Article: What is the price-to-earnings growth (PEG) ratio?7 Cyclical Stocks That Can Help You Play Defense
A cyclical stock is one that produces returns that are influenced by macroeconomic or systematic changes in the broader economy. In strong economic times, these stocks show generally strong growth because they are influenced by discretionary consumer spending. Of course, that means the opposite is true as well. When the economy is weak, these stocks may pull back further than other stocks.
Cyclical stocks cover many sectors, but travel and entertainment stocks come to mind. Airlines, hotels, and restaurants are all examples of cyclical sectors that do well during times of economic growth but are among the first to pull back in recessionary times.
Why do cyclical stocks deserve a place in an investor’s portfolio? Believe it or not, it’s for the relative predictability that they provide. Investors may enjoy speculating in growth stocks, but these are prone to bubbles. This isn’t to say that cyclical stocks are not volatile, but they offer price movement that is a bit more predictable.
In this special presentation, we’re looking at cyclical stocks that are looking strong as we come out of the pandemic. And some of these stocks held up well during the pandemic which means they’re starting from a stronger base.View the "7 Cyclical Stocks That Can Help You Play Defense "
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