It can be discouraging to see your stocks suddenly drop in value, but stock prices don't always match up with a company's long-term value. Warren Buffett made his fortune by investing in companies when they were selling at discounted prices to what they were ultimately worth.
History has shown repeatedly that investors get their best returns buying shares of quality companies during bear markets. Here are two stocks worth buying today to hold for a lifetime of strong returns.
1. Amazon
Amazon's (AMZN 2.61%) customer obsession has built a dominant online retail empire. This customer-first strategy has also gained it a stronghold in cloud computing (Amazon Web Services), providing more than one way for the company to deliver returns for long-term investors.
NASDAQ: AMZN
Key Data Points
Amazon has growing revenue streams from e-commerce, cloud computing, advertising, and third-party merchant services. Overall, it generated $637 billion in revenue last year, with most of its growth coming from nonretail services. This not only provides several avenues for Amazon to grow, but, importantly, boosts its margins. The company's net income doubled last year to $59 billion, and analysts expect the company's earnings to grow over 20% annually in the coming years.
The company continues to reinvest profits in new opportunities like artificial intelligence (AI) services in the cloud, healthcare (Amazon Pharmacy), satellite internet service (Kuiper), and Prime Air drone deliveries. Its focus on innovation reflects a corporate culture that is focused on investing in ways that protect its competitive advantage and build wealth for shareholders.
The stock has delivered monster returns over the last few decades. While future returns will be more modest given the company's size, Amazon is a competitively strong business to anchor anyone's portfolio.
The market sell-off has brought the stock's valuation down to an attractive 16 times the company's operating cash flow. This is the lowest multiple the stock has traded at in 15 years, suggesting the shares are undervalued.
2. Uber Technologies
Uber Technologies (UBER 0.41%) is another business that is innovating and providing essential services for the economy. The company has adapted to offer more than just ride-hailing services. Overall, it is showing the potential to become a one-stop destination for transportation needs. The long-term opportunity could be massive.
Uber has shown resiliency and tremendous growth potential with its strong financial results in 2024. It now has over 171 million monthly active platform consumers, with growth in delivery services (Uber Eats) and mobility (ride-hailing). Strong demand for rides and deliveries helped push its revenue up 18% last year to $44 billion.
NYSE: UBER
Key Data Points
The growing pool of people who rely on Uber is providing a lot of data. Uber uses this data to optimize pricing and discover new markets where demand is trending. For example, delivery services has proven to be a valuable channel for pulling in new customers to Uber's platform. In the fourth quarter of 2024, 61% of first-time delivery customers were new to Uber.
Like Amazon, Uber is investing to expand its offering and stay on the cutting edge of its market. Earlier this year, it announced a collaboration with chipmaker Nvidia to work on new solutions for the development of autonomous driving technology. It's also expanding its market potential with ride services tailored for specific needs, such as Uber Teens and Uber Health for patients.
Uber's momentum could lift the stock higher in the next few years, but its investments to expand its addressable market with new services could deliver wealth-building gains over the next decade and beyond. Analysts expect Uber's earnings to grow at an annualized rate of 35% over the next several years, yet investors can buy shares for a modest valuation of 20 times this year's earnings estimate.
