Taking a long-term view is a key ingredient for success in the stock market. If you’re buying a company’s stock because of its attractive fundamentals, it’s important to afford that purchase enough time to create value.
Investors often look to Wall Street analysts for help identifying long-term opportunities. That’s because these analysts come from firms that have a track record of picking winners over time. When dozens of these analysts look at a stock and arrive at the same conclusion, it can pay to listen.
Here are three stocks from three different, high-growth industries. Each has attracted an overwhelmingly bullish consensus on Wall Street. Let’s see why they are so popular.
Image source: Getty Images.
1. Uber Technologies
Many competitors have emerged in recent years, but when we think about ride-hailing services, Uber Technologies (NYSE:UBER) is still the brand that resonates most. But Uber has become so much more than that one-dimensional business model. It also has food delivery and freight ventures to bolster its growth rate.
The company is not without issues, as multiple legal battles have threatened to upend the way it classifies its drivers. Most of Uber’s workers are contractors, which means the company is not required to offer them benefits like health insurance or a minimum wage, and that saves the company a lot of money. But the United Kingdom has successfully forced Uber to provide those benefits, and California is trying to do the same.
These potential headwinds haven’t dampened the enthusiasm of Wall Street analysts, as they maintain a consensus buy rating on the stock. In September, Uber issued revised guidance that indicated it could break even, or even generate a small profit on an EBITDA basis for the third quarter. Combined with powerful revenue growth each year, it’s not hard to see why Wall Street is so bullish.
|
Metric |
2018 |
2021 (Estimate) |
CAGR |
|---|---|---|---|
|
Revenue |
$2.9 billion |
$16.1 billion |
77% |
Data source: Uber Technologies, Yahoo! Finance. CAGR = compound annual growth rate.
For a high-growth technology company, Uber’s forward price-to-sales multiple of 5.5 is very reasonable, especially since it’s slightly cheaper than key competitor Lyft, which has a much smaller business.
But most importantly, $16 billion in yearly revenue (and growing) affords Uber a lot of optionality when it comes to pivoting its business and navigating legal hurdles. Revolutionary technologies rarely get a trouble-free ride to the top, but consumers seem to love Uber, and that ensures staying power.
Image source: Getty Images.
2. Tenable Holdings
It feels like cyberattacks of some variation have made the news almost every few weeks this year. As our lives transition further and further into the digital realm, it’s incumbent on the companies we deal with to ensure they have an adequate cybersecurity strategy to protect our data (and their assets).
Tenable‘s (NASDAQ:TENB)…
Read More: 3 No-Brainer Stocks Wall Street Loves