There are no two ways about it. Amazon is one of the most successful stocks of the modern era, up approximately 300,000% since its 1997 public offering. The next 30 years probably won’t be nearly as profitable, but thanks to the company’s foray into cloud computing, the e-commerce giant is still one of the most promising investments on the market right now.
However, here is a better growth stock to consider to add to your portfolio. it is Uber technologies(NYSE: UBER). Here’s why.
While founders Travis Kalanick and Garrett Camp didn’t exactly invent the premise of ride-hailing apps, they’re pretty much credited with bringing the idea into the mainstream. It continues to be increasingly popular among consumers. Uber’s 20% revenue growth in the third quarter continues well-established trends. And it is increasingly profitable.
Analysts also expect more growth at the top and bottom going forward.
Data source: StockAnalysis.com. Chart by author.
However, this progress is only part of the favorable argument for owning a stake in Uber, not even the most important part. Far more important is the underlying cultural reason for this continued growth in sales and earnings. That is, car ownership is in decline. Ditto even for getting a driver’s license.
Figures from the US Federal Highway Administration released by the legal information website Consumer Shield back up the story, showing that domestic car registrations have declined from a 2001 peak of 138 million to a multi-decade low of just under 100 million in 2022. The COVID-19 pandemic and its aftermath are responsible for at least some of the recent weakness on this front. But this number regularly drops long before the contagion takes hold.
You may see or hear different information. Specifically, an oft-cited figure from the Federal Highway Administration suggests that as of 2022, there were actually 283.4 million registered vehicles on American roads. However, this number includes buses and heavy trucks that are generally owned by governments and corporations for commercial or public purposes.
The number of vehicles parked in people’s driveways is also is relatively stagnant…at least as a percentage of American households. Consumer Shield adds that as of 2022, the typical American household will own 1.83 cars, extending a slight decline from the 2001 peak of 1.89.
A similar dynamic is visible outside the US, where Uber is expanding.
It seems unlikely that this shallow downtrend will reverse anytime soon. A recent survey by the car-sharing network Zipcar shows that more than one in three Americans are considering not owning any vehicles by 2030. Almost one in five of these respondents, in fact, say they are very serious about getting rid of their cars and instead to use alternative forms of transport.
Other data also emphasize this growing lack of interest. For example, the Hedges Company forecasts that total sales of light vehicles (sedans, SUVs, non-commercial trucks) in the United States will reach a modest 15.9 million units this year despite a decent economy and greater stability post-Covid. That’s up from the 2023 number of 15.5 million, but still well below the 2016 peak of 17.4 million.
Younger consumers are growing up with less interest than their parents in owning a vehicle…or even getting a driver’s license. Figures from the US Department of Transportation show that as of 2022, only about one-quarter of the nation’s 16-year-olds had a driver’s license, compared with half of that age group in 1983. Even the number of 18-year-old drivers has dropped from 80% then to just 60% now.
The main reasons for this once unlikely dynamic? The cost is one; the average new car payment is now over $700 per month. Lack of need is another. Younger generations are quite comfortable finding entertainment and maintaining a social life through the computer. A transportation service like Uber makes it possible to live and function in an environment where such a perspective is increasingly the norm.
And again, this dynamic is evident in other parts of the world.
None of this suggests owning Amazon stock at this point is a mistake. It’s still a great show. In fact, in many ways Amazon is benefiting from the same underlying dynamics that drive Uber’s growth. This is a growing number of consumers who are content without owning or even driving a vehicle. These people are similarly comfortable with online shopping and let Amazon figure out how to deliver products to their doorstep. (Amazon’s cloud computing workhorse, meanwhile, has a different growth trend.)
However, of the two companies in question, Uber is arguably the more promising prospect simply because many investors still underestimate how strong its cultural tailwind is and how long it can last. For perspective, market research firm Future Market Insight believes that the global transportation services market will grow at an average annual rate of 15.4% until 2034.
Market leader Uber is poised to capture at least its fair share of this growth.
Have you ever felt like you missed out on buying the best performing stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation to companies that they think will fail soon. If you’re worried that you’ve already missed an investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia:if you invested $1000 when we doubled in 2009.you would have $374,613!*
Apple: if you invested $1000 when we doubled in 2008. you would have $46,088!*
Netflix: if you invested $1000 when we doubled in 2004 you would have $475,143!*
Right now we are issuing “Double Dip” alerts for three amazing companies and there may not be another opportunity like this anytime soon.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley has no position in any of the listed stocks. The Motley Fool has positions in and recommends Amazon and Uber Technologies. The Motley Fool has a disclosure policy.
