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Many of the biggest and most profitable companies today are the technology giants such as Alphabet (GOOGL - Free Report) , Apple (AAPL - Free Report) , and Meta Platforms (META - Free Report) . Their valuations have exploded higher over the last decade, but are becoming more mature, slower growth stocks. That’s great for investors who want steady returns, but if you want high-performance you must look elsewhere.
Today there are several up-and-coming technology companies that have the potential to grow into giants. These three tech companies have identified areas of underused inventory and turned it into productive assets. Furthermore, they have high Zacks Ranks, improving the odds of near-term strong stock price performance.
While there may not be another Apple, or Alphabet, these stocks each have the potential to own near monopolies in their markets. Nothing is a guarantee though, and two of them still must clear the hurdle of profitability.
Airbnb
Airbnb (ABNB - Free Report) is a leading platform for unique stays and experiences. The company provides a marketplace for connecting hosts and guests online or through mobile devices and computers to book spaces and experiences. Airbnb has dramatically changed the way people travel and how they stay by utilizing underused spaces and turning them into cash generating assets.
Like much of the technology universe, Airbnb had a brutal 2022 and corrected- 80% from its highs. This year has been the complete opposite. ABNB stock had a strong Q1 and is outperforming both the market and its industry.
Image Source: Zacks Investment Research
Airbnb currently boasts a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Sales and earnings estimates over the next few quarters are robust. Q1 sales are projected to grow 19% YoY to $1.8 billion, while earnings are expected to climb 566%, going from -$0.03 per share a year ago to $0.14 per share today.
Even with those optimistic estimates, analysts are still upgrading expectations. Q2 and FY23 earnings have been unanimously revised higher, by 16% and 18% respectively.
Image Source: Zacks Investment Research
ABNB is trading at a one-year forward earnings multiple of 33x, which is above the industry average 23x, and below its two-year median of 41x.
Image Source: Zacks Investment Research
Airbnb is benefiting from strong travel industry demand. Continued strength in Nights & Experiences Booked across all regions, especially in the Asia-pacific region, remains a tailwind. Moreover, increasing gross nights booked in high-density urban areas is a major positive.
Uber Technologies
Uber Technologies (UBER - Free Report) is a technology and consumer software company. Uber’s applications connect independent drivers with individuals needing taxi services, as well as couriers with restaurants, groceries, and other stores with delivery service for consumers. Uber was the one of the first companies to introduce the idea of gig work, and brilliantly thought of the idea to use the excess supply of cars for productive use.
Uber is a Zacks Rank #2 (Buy) stock, indicating upward trending earnings revisions. Sales projections for the next few earnings periods are very positive. Current quarter sales are expected to grow 27% YoY to $8.7 billion. Additionally, next year’s earnings estimates are expected to show a profit, which if UBER can maintain, would mark a huge shift for the company.
UBER surprised investors last quarter by posting adjusted earnings of $0.29 per share to blow away projections that call for a -$0.21 loss. This move towards consistent profitability is critical to UBER’s future and would truly cement its position as a future tech giant.
Uber is currently trading at a one-year forward sales multiple of 1.7x, which is below the broad market average of 3.6x, and below its four-year median of 4x. With a P/S multiple below the market average, UBER is about as cheap as it has been since its IPO. Again, I think it’s important to reiterate how important it is for Uber to get to net profits for its long-term success.
Image Source: Zacks Investment Research
Uber’s stock performance has been underwhelming. Since its IPO it is still underwater -25%. But for investors who think Uber can become a de facto transportation company, they have no problem with that.
Image Source: Zacks Investment Research
The real return potential for Uber comes from the potential of self-driving cars. If the technology can evolve the way investors hope, Uber could be able to own a major portion of the broader transportation market. If that is the case, Uber can grow into a truly mammoth business. It is still a big ask though. While it constantly feels like we are on the cusp of self-driving cars, it was expected to be here by now.
DoorDash
DoorDash (DASH - Free Report) operates a logistics platform that connects merchants, consumers, and dashers (couriers) in the US and internationally. Like Uber, DoorDash found a purpose for unused vehicles, and created an opportunity for accessible gig workers to utilize additional free time.
DoorDash has strong prospects over the next few quarters. Sales growth is expected to be ~20% over the next few quarters and earnings are being revised higher. Because of this DASH currently has a Zacks Rank #2 (Buy), indicating strong near-term expectations for the stock.
Image Source: Zacks Investment Research
Like Uber, DoorDash still struggles with net losses. The explosion of popularity in food delivery since the Covid-19 pandemic keeps DASH in an advantageous position pushing sales higher, but that path to profitability is critical.
That reality hit extremely hard last year, and the stock still shows a loss since its IPO. Inflation, and its effect on the cost of labor has been a major obstacle for DASH getting to net profitability. Fortunately, the economic data is improving, and disinflation is slowly taking place.
Image Source: Zacks Investment Research
DASH is trading at a one-year forwards sales multiple of 3x, which is below the industry average of 4.5x, and considerably below its three-year median of 6.3x. This much lower valuation is a positive development for investors today.
Image Source: Zacks Investment Research
Some bearish catalysts have really hammered DASH’s stock price and valuation lower, but this could be an opportunity. DASH is one of the most popular delivery apps out there, and through strategic international acquisitions, DASH can come out as the top food delivery service. Which means investors today may be able to purchase a future tech giant at a discounted price.
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Time to Buy These 3 Next Gen Big Tech Companies?
Many of the biggest and most profitable companies today are the technology giants such as Alphabet (GOOGL - Free Report) , Apple (AAPL - Free Report) , and Meta Platforms (META - Free Report) . Their valuations have exploded higher over the last decade, but are becoming more mature, slower growth stocks. That’s great for investors who want steady returns, but if you want high-performance you must look elsewhere.
Today there are several up-and-coming technology companies that have the potential to grow into giants. These three tech companies have identified areas of underused inventory and turned it into productive assets. Furthermore, they have high Zacks Ranks, improving the odds of near-term strong stock price performance.
While there may not be another Apple, or Alphabet, these stocks each have the potential to own near monopolies in their markets. Nothing is a guarantee though, and two of them still must clear the hurdle of profitability.
Airbnb
Airbnb (ABNB - Free Report) is a leading platform for unique stays and experiences. The company provides a marketplace for connecting hosts and guests online or through mobile devices and computers to book spaces and experiences. Airbnb has dramatically changed the way people travel and how they stay by utilizing underused spaces and turning them into cash generating assets.
Like much of the technology universe, Airbnb had a brutal 2022 and corrected- 80% from its highs. This year has been the complete opposite. ABNB stock had a strong Q1 and is outperforming both the market and its industry.
Image Source: Zacks Investment Research
Airbnb currently boasts a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Sales and earnings estimates over the next few quarters are robust. Q1 sales are projected to grow 19% YoY to $1.8 billion, while earnings are expected to climb 566%, going from -$0.03 per share a year ago to $0.14 per share today.
Even with those optimistic estimates, analysts are still upgrading expectations. Q2 and FY23 earnings have been unanimously revised higher, by 16% and 18% respectively.
Image Source: Zacks Investment Research
ABNB is trading at a one-year forward earnings multiple of 33x, which is above the industry average 23x, and below its two-year median of 41x.
Image Source: Zacks Investment Research
Airbnb is benefiting from strong travel industry demand. Continued strength in Nights & Experiences Booked across all regions, especially in the Asia-pacific region, remains a tailwind. Moreover, increasing gross nights booked in high-density urban areas is a major positive.
Uber Technologies
Uber Technologies (UBER - Free Report) is a technology and consumer software company. Uber’s applications connect independent drivers with individuals needing taxi services, as well as couriers with restaurants, groceries, and other stores with delivery service for consumers. Uber was the one of the first companies to introduce the idea of gig work, and brilliantly thought of the idea to use the excess supply of cars for productive use.
Uber is a Zacks Rank #2 (Buy) stock, indicating upward trending earnings revisions. Sales projections for the next few earnings periods are very positive. Current quarter sales are expected to grow 27% YoY to $8.7 billion. Additionally, next year’s earnings estimates are expected to show a profit, which if UBER can maintain, would mark a huge shift for the company.
UBER surprised investors last quarter by posting adjusted earnings of $0.29 per share to blow away projections that call for a -$0.21 loss. This move towards consistent profitability is critical to UBER’s future and would truly cement its position as a future tech giant.
Uber is currently trading at a one-year forward sales multiple of 1.7x, which is below the broad market average of 3.6x, and below its four-year median of 4x. With a P/S multiple below the market average, UBER is about as cheap as it has been since its IPO. Again, I think it’s important to reiterate how important it is for Uber to get to net profits for its long-term success.
Image Source: Zacks Investment Research
Uber’s stock performance has been underwhelming. Since its IPO it is still underwater -25%. But for investors who think Uber can become a de facto transportation company, they have no problem with that.
Image Source: Zacks Investment Research
The real return potential for Uber comes from the potential of self-driving cars. If the technology can evolve the way investors hope, Uber could be able to own a major portion of the broader transportation market. If that is the case, Uber can grow into a truly mammoth business. It is still a big ask though. While it constantly feels like we are on the cusp of self-driving cars, it was expected to be here by now.
DoorDash
DoorDash (DASH - Free Report) operates a logistics platform that connects merchants, consumers, and dashers (couriers) in the US and internationally. Like Uber, DoorDash found a purpose for unused vehicles, and created an opportunity for accessible gig workers to utilize additional free time.
DoorDash has strong prospects over the next few quarters. Sales growth is expected to be ~20% over the next few quarters and earnings are being revised higher. Because of this DASH currently has a Zacks Rank #2 (Buy), indicating strong near-term expectations for the stock.
Image Source: Zacks Investment Research
Like Uber, DoorDash still struggles with net losses. The explosion of popularity in food delivery since the Covid-19 pandemic keeps DASH in an advantageous position pushing sales higher, but that path to profitability is critical.
That reality hit extremely hard last year, and the stock still shows a loss since its IPO. Inflation, and its effect on the cost of labor has been a major obstacle for DASH getting to net profitability. Fortunately, the economic data is improving, and disinflation is slowly taking place.
Image Source: Zacks Investment Research
DASH is trading at a one-year forwards sales multiple of 3x, which is below the industry average of 4.5x, and considerably below its three-year median of 6.3x. This much lower valuation is a positive development for investors today.
Image Source: Zacks Investment Research
Some bearish catalysts have really hammered DASH’s stock price and valuation lower, but this could be an opportunity. DASH is one of the most popular delivery apps out there, and through strategic international acquisitions, DASH can come out as the top food delivery service. Which means investors today may be able to purchase a future tech giant at a discounted price.