Will equities perform well in 2026, as they have most years during the past decade? No one can predict that for sure.
We can, however, be reasonably confident that in another 10 years, major indexes will be significantly up from their current level. Individual investors can achieve even better returns than the stock market average by investing in companies with very strong prospects. Let's consider two excellent candidates: SoFi Technologies (SOFI 2.87%) and Uber Technologies (UBER 1.09%).
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1. SoFi Technologies
SoFi, an online banking platform, reported strong growth across the board last year. Revenue jumped, earnings soared, and its users and assets are also moving in the right direction.
A strong performance during a single year may not be indicative of whether a company can perform well over a decade, but several aspects of SoFi's business put it in an excellent position to do so. It's establishing itself as a leading digital bank.
Customers have access to all its services on its interactive, easy-to-use app. They get to choose from a large number of options, including some that many legacy banks often don't offer, such as high-yield savings accounts. Average percentage yields (APYs) in the 3% to 4% range beat the less than 1% that some big banks offer for their savings accounts.
SoFi can afford that partly thanks to not having a single retail location, which allows it to save on overhead and pass those savings on to its clients in various ways. Management has also recently reintroduced cryptocurrency trading to its platform. That's something many legacy banks tend to shy away from, despite the popularity of crypto, especially among younger investors.
NASDAQ: SOFI
Key Data Points
Here's the main point: SoFi is a leader among companies offering a new banking model designed for contemporary demands, and that's why it is particularly appealing to younger customers. During the next decade, as millennials and younger consumers accumulate more wealth and seek banking services, SoFi should be one of the top options they consider. The company should be able to attract significant business as a result and continue delivering strong revenue and earnings growth.
There are some risks. The stock looks overvalued, and there is some concern about its exposure to riskier personal loans. Even with these caveats, there are good reasons to remain bullish on the stock.
SoFi compensates for its personal loan exposure by targeting clients with high net worths and above-average credit scores. And while the stock currently trades at 47 times forward earnings, that won't matter too much for investors who stay the course, given its rapid growth and promising prospects over the next five years and beyond.
2. Uber Technologies
Some might scoff at the idea that Uber will perform well during the next decade. The company is a leader in its industry, but ride-hailing services have become ubiquitous, and there is significant competition.
How much more can the company grow, especially once we account for self-driving vehicles, which are slowly gaining traction in some cities and could become far more widespread by 2036? Even with these potential threats, though, Uber's outlook seems bright.
Consider that despite the competition, it continues to post outstanding financial results. Revenue and earnings grew at a strong pace last year, as did the company's number of trips and monthly active customers.
That indicates there is still significant demand for Uber's services and an ample growth runway. The company has pointed out that even in its most penetrated markets, only about 10% of adults use its services on a monthly basis.
NYSE: UBER
Key Data Points
We don't know when that will peak, but Uber's growth suggests it hasn't yet reached it yet. And the competition may be fierce, but the company benefits from a strong network effect, as the number of drivers on its platform attracts more clients, and vice versa. That should allow it to remain successful despite other ride-hailing platforms fighting for market share.
Lastly, self-driving vehicles are unlikely to become dominant within the next 10 years. Uber has also gotten ahead of the threat by becoming the platform of choice for some of the leading autonomous vehicle companies. The company is already adapting to this change that will likely take more than 10 years to fully materialize in major cities around the world.
Uber's prospects through 2036 remain very strong, making it a top pick to hold through then.
