While it hasn’t performed that well of late, I remain very bullish on S&P 500 growth stock Uber Technologies (NYSE: UBER). In my view, the tech stock should be trading at significantly higher levels today.
It seems I’m not the only one who’s very bullish on the name. In recent weeks, the company’s seen around $15m worth of insider buying.
Uber looks cheap today
Despite being a relatively mature company, Uber continues to grow at a strong pace. This year, its revenue is projected to hit $58bn – 55% higher than the figure in 2023.
This growth isn’t reflected in the valuation, however. Looking at earnings forecasts for next year, the forward-looking price-to-earnings (P/E) ratio is only 15.5. That’s a low earnings multiple relative to the valuation. It suggests the stock is cheap.
Note that the trailing free cash flow yield is around 6% today. That also suggests the stock’s cheap.
Insiders are filling their boots
Someone who clearly sees value at the current share price is CEO Dara Khosrowshahi. On 10 September, he bought 141,000 Uber shares at a price of $71 per share, spending around $10m on the stock.
President and chief operating officer Andrew Macdonald obviously sees value as well. On 4 September, he snapped up 70,000 shares at a price of $75.65 per share – a $5.3m trade.
This insider buying activity is notable. In my view, it’s a bullish signal. There are few people who have a better understanding of Uber’s business performance and future prospects than these two individuals. The fact that they’re buying stock suggests that they expect the business to keep performing well and the share price to rise.
Analysts are bullish too
It’s worth pointing out that Wall Street analysts are bullish too. At present, the average 12-month price target for Uber is $102. That’s about 43% above the current share price. If it was to be hit, a $5,000 investment today would grow to around $7,200.
Autonomous driving risks
Of course, there are no guarantees that Uber shares will perform well from here, despite the bullish insider buying activity. Some investors are concerned that self-driving technology from the likes of Tesla and Alphabet (Waymo) is going to disrupt its business model.
While I acknowledge this is a risk, I personally think Uber will be fine as it’s signing a ton of deals with autonomous driving companies. Note that earlier this month, it launched autonomous rides in London in partnership with Britain’s Wayve.
An opportunity today?
Given the low valuation and the significant amount of insider buying, I think the stock’s worth a closer look today. At some stage, I expect it to rally sharply.