The past few weeks haven't been particularly great ones for the stock market. All told, the S&P 500 currently sits 7% below its late-July peak. And lower lows are still a possibility.
Veteran investors know that this is all just short-term turbulence. The market always eventually bounces back from such weakness, spending far more time logging long-term gains than it does losing ground. Indeed, the market's holding up better here than many people expected it to be able to just a few months back. A renewed bullish effort may yet push us back into a full-blown bull market in the foreseeable future.
While that tailwind will lift most stocks, it won't lift them equally. Some tickers are better positioned than others to reap the benefit of a bull market. Ride-hailing outfit Uber Technologies (UBER +0.23%) is one of these favored names. Here's a look at the top three reasons why it's a superior bull market bet.
1. Demographic tendencies work in Uber's favor
Presuming a bull market is rooted in economic growth, such long-lived rallies bode just as well for non-investors as they do for investors. That includes young adults, many of whom may still be more interested in living life to the fullest than in tucking money away for retirement.
That's great news for Uber, which serves a disproportionately high number of young adults.
The specifics: Roughly two-thirds of Uber's riders are between the ages of 16 and 34, which is the same age group (barring the over-90 crowd) that's least likely to own a car yet most likely to need transportation services. This crowd also eats out at restaurants more often than their older counterparts, is more likely to go to a concert, and takes more vacation time than older coworkers do ... all activities that require transportation.
If economic tailwinds start blowing and stocks start soaring, don't be surprised to see Uber's business begin booming too.
2. Uber is doing well with more than one kind of business
You most likely know it as a ride-hailing outfit. But that's not all Uber Technologies does. Around one-third of last quarter's revenue was driven by food and product deliveries, as was the second quarter's EBITDA.
This is no small matter. Although ferrying people from one place to another remains its chief profit center, the world's increasingly relying on localized contract drivers like Uber's to handle the logistics involved in delivering meals and other goods bought online.
Yet, this model has only scratched the surface of its potential.
Image source: Getty Images.
With the ongoing mainstreaming of doorstep delivery, Morgan Stanley estimates the global restaurant delivery market will grow at an annualized pace of 14% through 2028, with the industry as a whole reaching profitability during this period. That number jibes with outlooks from Precedence Research and Mordor Intelligence.
As for deliveries of non-food products, this market could grow at an even faster clip. Straits Research is calling for yearly growth of 21% through 2030 for same-day delivery service of merchandise ordered online, and at the same time expects annualized growth of more than 11% for closely related last-mile delivery services.
Given this opportunity, the recent partnership Uber forged with technology giant Oracle to "make it easier than ever for retailers to leverage on-demand delivery -- and even returns -- to delight consumers, streamline logistics, and ultimately boost loyalty and sales" deserves a closer look.
3. A bull market solidifies its recent swing to profitability
Last but not least, while Uber Technologies swung to its first-ever operating profit during the three-month stretch ending in June, the news didn't exactly light a fire under the stock. In fact, shares actually slumped following the report. Some observers doubt the feat can be expanded -- or even repeated -- to any meaningful degree. Besides, investors have seen storied companies swing to a profit in the past only to see them wither away just as quickly as they took shape.
NYSE: UBER
Key Data Points
Given the way attitudes regarding mobility and vehicle ownership are evolving, though, Uber doesn't look like it's going to become one of those cautionary tales.
Simply put, interest in car ownership continues to wane even after falling for the past several years. Take a recent survey of a few thousand consumers performed by Statista last year as evidence of this paradigm shift. Car ownership was once an aspiration for most people. Now, only one-third of Americans who don't currently own a car intend to purchase an automobile in the foreseeable future. The other two-thirds? They specifically prefer not owning one, citing reasons ranging from environmental concerns to cost to convenience.
This disinterest in car ownership is most pronounced among people between the ages of 25 and 40 ... not only Uber's biggest and best customer base, but also parents to young children who are picking up on their parents' preference for ride-hailing.
Connect the dots. Uber is already in the black. Any bull market driven by economic prosperity is only apt to expand its current profitability, as these young adults age and their attitudes toward mobility become the widespread norm.
The new sky-high price of cars and similarly high interest rates for auto loans, of course, will only hasten this trend.
