Missing out on Nvidia (NASDAQ: NVDA) has likely been a frustrating experience for many investors. Although most people have exposure to it indirectly through index funds, it's nothing compared to owning the stock directly.
However, I've got two stocks with substantial upside potential that might be able to make up for some of the performance you've missed out on by not owning Nvidia directly.
UiPath
First is UiPath (PATH 3.86%). In a year when nearly any stock associated with artificial intelligence (AI) has gone up, UiPath hasn't had the same luxury. In fact, the stock is down about 50% this year although much of that decline is unjustified, in my opinion.
UiPath makes robotic process automation (RPA) software. This allows its users to automate repetitive tasks and allows its clients to focus on projects that require original thinking. It also has various AI plug-ins that broaden the scope of what it can automate. While the RPA market is fairly young, Grand View Research expects this market to grow at nearly a 40% compound annual rate, reaching a global market size of more than $30 billion by 2030.
In the long term, UiPath's success will be fairly straightforward if it can maintain its market leadership position. However, it has been a bumpy 2024.
UiPath's report for its fiscal 2025's first quarter (ended April 30) was packed with information, and not much was good. UiPath cut its full-year revenue outlook and also reverted to an unprofitable state. Its CEO also resigned, although he had only had the role for a few months. Replacing him is former CEO and founder Daniel Dines, so it's not a massive shakeup.
Although the stock struggled heading into earnings, this was enough to send shares crashing over 30%.
So why can UiPath turn it around? First, its market opportunity is massive, and UiPath is a leader in the field. Second, having the founder-CEO return to the role brings some familiarity to the job. Lastly, UiPath is correcting its profitability slip by laying off around 10% of its workforce, something many companies did last year.
PATH PS Ratio data by YCharts
UiPath is taking the right steps to bounce back, and the stock is also dirt cheap. At 5 times sales, the stock represents massive value, especially for a recently profitable company that is still expected to grow in the mid-double-digit range. While it may not be Nvidia, it does have the potential to double fairly easily with some good news.
MercadoLibre
MercadoLibre (MELI 3.01%) is often described as the Amazon of Latin America thanks to its dominant e-commerce platform and massive logistics network. However, it also has a thriving fintech wing, making it much more diverse.
Regardless, MercadoLibre has been downright dominant in its market, with Q1 currency-neutral revenue growth of 94%. It's also improving its profit margins, which rose to 7.9% versus 6.3% last year.
This is just a continuation of MercadoLibre's decade-long success story. With the massive Latin American population it serves, there is far more growth ahead for MercadoLibre. Despite that, the stock trades far below where it was throughout most of the 2010s.
MELI PS Ratio data by YCharts
While I'm not arguing that the stock should be worth more than 20 times sales, I do think the valuation could be higher due to its growth. Regardless, MercadoLibre has a massive growth runway, and investors shouldn't be surprised if its stock behaves like Amazon's over the long term: a massive market beater.
It's hard for a company growing incredibly fast while improving margins to underperform the market, which gives me confidence that MercadoLibre could be a stock that makes up for missing out on Nvidia over the next three to five years.
