This ride-hailing app company's $62.5 billion valuation makes the startup valued higher than 80% of the stocks on the S&P 500. However, as Mary-Lynn Cesar of Kapitall.com points out and as the prevalence of unicorn startups shows, high valuations aren't everything.
Ride-hailing app Uber is now valued at $62 billion. That makes it the most valuable private startup in the world.
On Friday morning, Bloomberg broke the news that Uber (Pending:UBER) is seeking $2.1 billion in its latest round of financing, a figure that will bring the ride-hailing startup's valuation to a staggering $62.5 billion. This means Uber is worth more than carmakers General Motors (GM)—which has a market capitalization of $55.45 billion—and Ford (F), which has a market cap of $55.56 billion.
As Bloomberg points out, Uber's $62.5 billion valuation makes the startup valued higher than 80% of the stocks on the S&P 500. But, as the prevalence of unicorn startups shows, high valuations aren't everything. Back in June, Bloomberg reported that Uber operates at a loss and generated $470 million in losses on revenue of $415 million. And since Uber is focusing its efforts—and money—on global domination at the moment, the startup isn't likely to become profitable anytime soon.
That doesn't mean Uber won't fare well; after all, Amazon (AMZN) is only now becoming a profitable company after reporting two consecutive quarters of profits earlier this year.
With that in mind, below is a list of profitable S&P 500 stocks with a lower market cap than Uber's latest valuation, earnings per share (EPS) growth of 25% or higher this year, and sales growth of 15% or higher over the past five years.
The stocks also have a price/earnings to growth (PEG) ratio below 1. As the name suggests, this valuation ratio factors in expectations of a stock's future earnings into its calculations. The higher the expected earnings growth, the lower the PEG ratio and a PEG under 1 typically means a stock can be considered undervalued.
One last thing, each of the stocks is trading below its target price, which is the future price analysts' predict for a stock.
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1. American Airlines Group, Inc. (AAL): Operates in the airline industry. Market cap at $28.28B, most recent closing price at $43.27. EPS growth this year at 134.90%. Sales growth over the past five years at 16.40%. PEG at 0.75. American Airlines' target price is $53.69.
2. DR Horton, Inc. (DHI): Operates as a homebuilding company in the United States. Market cap at $12.13B, most recent closing price at $31.66. EPS growth this year at 39.00%. Sales growth over the past five years at 19.70%. PEG at 0.87. DR Horton's target price is $33.34.
3. Expedia, Inc. (EXPE): Operates as an online travel company in the United States and internationally. Market cap at $16.06B, most recent closing price at $122.27. EPS growth this year at 79.00%. Sales growth over the past five years at 16.00%. PEG at 0.89. Expedia's target price is $148.83.
4. Marathon Petroleum Corporation (MPC): Engages in refining, transporting, and marketing petroleum products primarily in the United States and internationally. Market cap at $30.00B, most recent closing price at $54.44. EPS growth this year at 32.20%. Sales growth over the past five years at 16.50%. PEG at 0.84. Marathon Petroleum's target price is $67.20.
5. Skyworks Solutions, Inc. (SWKS): Offers analog and mixed signal semiconductors worldwide. Market cap at $16.14B, most recent closing price at $83.44. EPS growth this year at 72.30%. Sales growth over the past five years at 24.90%. PEG at 0.96. Skyworks Solutions' target price is $111.81.
6. Tesoro Corporation (TSO): Engages in refining and marketing petroleum products in the United States. Market cap at $13.45B, most recent closing price at $110.23. EPS growth this year at 133.20%. Sales growth over the past five years at 19.20%. PEG at 0.77. Tesoro's target price is $122.31.
7. United Continental Holdings, Inc. (UAL): Engages in the provision of passenger and cargo air transportation services. Market cap at $21.75B, most recent closing price at $56.74. EPS growth this year at 91.50%. Sales growth over the past five years at 19.00%. PEG at 0.16. United Continental's target price is $80.64.
8. Valero Energy Corporation (VLO): Operates as an independent petroleum refining and marketing company. Market cap at $34.03B, most recent closing price at $69.99. EPS growth this year at 40.80%. Sales growth over the past five years at 15.20%. PEG at 0.72. Valero's target price is $78.33.
(Monthly return data sourced from Zacks Investment Research. All other data sourced from FINVIZ.)
By Mary-Lynn Cesar of Kapitall.com
