2 Top Stocks to Watch, Uber and Shopify

As the second-quarter earnings season is starting and investors are waiting for the best investment opportunities based on Wall Street’s estimates, let’s look at two top stocks: Uber Technologies Inc. (NYSE:UBER) and Shopify Inc. (NYSE:SHOP).

Uber Stock Anaysis

Uber has grown from the humble idea of pushing a button on a phone and having a black car show up to aspiring to revolutionize transportation, transactions, and logistics.

By connecting people with ride services, public transport, bikes, and scooters, Uber indisputably improves mobility in cities.

It also facilitates seamless transactions by connecting consumers with restaurants, grocers, and merchants. And it improves logistics by linking shippers and carriers in the freight business. Working in more than 70 countries and 10,000 cities, Uber is a transnational firm that may well be under-appreciated and under-rated.

The company has never rested on its laurels and has been exploring new initiatives to grow. For example, it is investing in water transportation and food business services.

First, to address the growing tourist demand for water transportation services in Europe, Uber is starting yacht services in Ibiza, Spain. And in July 2024, Uber is going to start a new “limo boat” service in Venice, Italy. By doing so, it aims to help visitors and locals optimize their water travel around the Venetian Lagoon.

Data from summer 2023 reveals a 55% rise in demand for Uber’s transport services in Spain and Greece. In addition, Uber Boat is set to grow its operations in Greece. It will cover not only Mykonos but also Athens, Corfu, and Santorini. This expansion of Uber’s transport services will allow travelers to reach beach clubs and remote spots easier than before.

Second, Uber is also investing in food business services. It has bought Delivery Hero SE’s (OTC:DELHY) foodpanda delivery business in Taiwan for $950 million. As well as becoming stronger in the Taiwan food delivery industry, it is creating new employment opportunities in the region. 

Also, in strategic partnership with Instacart, Uber Eats food delivery is now available to all Instacart customers. This means more orders to restaurants working with Uber Eats and more options for customers in the United States looking for places to eat.

The outcomes for the first quarter of the fiscal year 2024 once more show that Uber is dedicated to innovation and to achieving stable and profitable growth.

In the quarter that ended March 31, 2024, the company’ revenue increased by 14.8% compared to last year, reaching $10.13 billion. Its income from operations was $172 million.

By contrast, the company saw a loss of $262 million during the same period the previous year. Moreover, Uber’s adjusted EBITDA went up by 81.6% compared to last year, reaching $1.38 billion.

Its free cash flow increased by 147.5% from the same time in the previous year to $1.36 billion. And its cash inflow from operating activities rose by 133.7%, reaching $1.42 billion.

For the second quarter, Uber expects gross bookings to range between $38.75 billion and $40.25 billion. This means an increase of 18% to 23% on a constant currency basis over the same period last year.

Also, the company predicts its adjusted EBITDA will be from $1.45 billion to $1.53 billion. This means an increase of 58% to 67% over the same period last year.

For the fiscal second quarter that ended in June 2024, analysts expect Uber’s revenue and EPS to rise by 14.3% and 68.5% compared to last year, reaching $10.55 billion and $0.30, respectively.

For the full-year 2024, revenue is estimated to increase 15.8%, to $43.19 billion, and EPS by 3.7%, to $0.90.

The company’s share price has been on a tear. In the past year, Uber’s shares increased by more than 36% though they are flat over the past 6 months.

The bottom line of an Uber stock analysis. Uber has the potential to rise substantially in share price to $86 per share according to the consensus of 47 analysts.

Shopify Stock Still Impresses

Shopify got its start by making it easy for ordinary retailers to sell products online and today remains a leader in commerce infrastructure.

Millions of businesses of all sizes in more than 175 countries use the Shopify platform. Famous for being fast, customizable, reliable, and secure, Shopify enables brands to grow and innovate in the retail world.

Shopify has leveraged its dominance to collaborate more, such as with Target to improve the Target Plus marketplace. This partnership is designed to improve customers’ access to different products from Shopify sellers like True Classic and Caden Lane.

Also, seeing the unused potential in business-to-business trading, the company has built B2B on Shopify to allow merchants to enter new markets more easily.

Big brands are using Shopify to make their wholesale operations easier, often combining B2B and DTC stores on one platform. By creating new ways for businesses to earn money, Shopify is expanding in the B2B market.

Starting in 2022, Shopify introduced more than four dozen B2B features. They show Shopify is a flexible and innovative commerce platform expanding in both customer-to-business and B2B markets. The introduction of new features led to a 130% rise in B2B sales in the first quarter of 2024 compared to last year.

During this time, Shopify’s results for the first quarter of fiscal year 2024 have improved. In the quarter ending on March 31, 2024, Shopify reported revenue growth of 23.4% from last year, reaching $1.86 billion. Gross profit increased by 33.5% from the previous year, reaching $957 million.

In the category of things starting to look up, the company’s adjusted operating income reached $201 million. During the same period last year, Shopify had an operating loss of $31 million.

Both the adjusted net income and adjusted net income per share increased compared to the previous year. The former reached $256 million, and the latter, $0.20 each.

Cash inflows from operating activities also increased by 138% compared to last year’s number, rising to $238 million.

For the second quarter of 2024, Shopify expects revenue will grow at a high-teens percentage compared to last year. Plus, the free cash flow margin is predicted to be the same as in the first quarter of 2024. The company now has reported three quarters in a row with a double-digit free cash flow margin, a trend that is expected to continue.

Shopify is predicted to continue growing even more, both in revenue and earnings per share in the year. For the fiscal second quarter, which ended in June 2024, analysts expect that Shopify’s revenue will go up by 18.6% from last year, reaching $2.01 billion. EPS is forecast to rise by 45.9% from the prior year’s period to $0.20.

Also, Shopify has gone beyond the expected revenue and EPS in all four of the last quarters. For the financial year ending in December 2024, the company’s revenue is expected to grow by 20.9%, amounting to $8.54 billion. EPS is predicted to rise by 34%, to $0.98, compared to last year.

Shopify’s shares are down 18% over the past year but 41 analysts see 26.2% upside to $76.76 per share.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.