Having some portfolio exposure to S&P 500 stocks has really paid off this year. Over in the US, a lot of stocks have soared in 2024.
In 2025, it’s highly likely that the US stock market will throw up more opportunities for investors. With that in mind, here’s a look at a S&P 500 stock that Goldman Sachs believes could rise nearly 60% next year.
A well-known name
The stock I’m going to zoom in on today is Uber Technologies (NYSE: UBER). It’s a major global transportation and food delivery company.
Its share price has been volatile in 2024. In October, it surged to $86, however, recently it has pulled back to $61 on the back of concerns about competition from Tesla.
Goldman Sachs says Buy
Goldman’s analysts see this weakness as a major buying opportunity.
It has a Buy rating on the stock and a $96 price target – roughly 57% above the current share price. It has also named it as a top internet stock pick for 2025, stating that it has an attractive risk-reward skew.
Goldman’s number crunchers expect Uber’s gross bookings and adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) to grow at compound annual growth rates (CAGRs) of 16% and 39%, respectively, from 2023 to 2026. In other words, they see significant growth in the years ahead.
I’m buying
I like this call from Goldman Sachs. I’ve held Uber stock for a while now and I bought more shares last week near the $60 level. There are a number of reasons I’m bullish.
One is that I see plenty of growth potential. This is a company that’s continually expanding into new areas of travel (train rides, boat rides, car rental, bike/scooter rental, alcohol delivery, etc) and I reckon it will do well as the travel industry grows. I see the company’s instantly recognisable name as a major competitive advantage. When people need to get from A to B, Uber is usually the first name that comes to mind.
Another is that earnings are rising rapidly. This year, earnings per share (EPS) are projected to rise 98%. For 2025, analysts forecast EPS growth of 28%. That’s a higher level than most ‘Magnificent 7’ companies are forecast to generate.
Then there’s the valuation. Currently, the price-to-earnings (P/E) ratio here is only 26. I think that’s a steal given the company’s brand power, market dominance, and growth potential.
My view on the risk from Tesla
Now, there are risks here, of course.
The big one that a lot of investors are concerned about right now is competition from Tesla. Many investors seem to believe that Tesla’s self-driving taxis (which probably won’t be on the road for a few years) are going to disrupt Uber’s business model.
Personally, I think this risk has been overblown. Looking ahead, I believe that many automotive companies will have self-driving taxis, and I reckon Uber will be the platform that connects these companies with consumers.
So, while Tesla’s goals do add some uncertainty, I continue to see a lot of potential in this stock and believe it’s worth considering.
The post This S&P 500 stock could rise 57% in 2025, according to Goldman Sachs appeared first on The Motley Fool UK.
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Edward Sheldon has positions in Uber Technologies. The Motley Fool UK has recommended Tesla and Uber Technologies. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
