Uber, Costco, and MercadoLibre are excellent long-term investment options.
While the S&P 500 nears its all-time high, it may be tempting to reduce some holdings rather than acquire new stocks. However, some of the market’s most robust stocks typically continue to appreciate over time, suggesting that cautious investors cashing in today may lose out on substantial future gains.
If you’re able to overlook short-term fluctuations and plan to retain your investments for several years, consider focusing on well-managed companies with substantial competitive advantages, durable business models, and significant growth potential. Three of my top picks that meet these criteria are Uber (UBER), Costco (COST), and MercadoLibre (MELI).
1. Uber
As the leading ride-hailing service globally, Uber had 180 million monthly active users as of June, up from 171 million in 2024 and 93 million in 2020. Its revenue grew at a compound annual growth rate (CAGR) of 41% from 2020 to 2024, and it achieved profitability in 2023 following strategic layoffs and cost reductions, with net income increasing fivefold in 2024.
This growth was fueled by increasing market share and the expansion of its Uber One subscription, which saw subscribers rise to 36 million in June from 30 million in 2024. Subscribers reportedly spend about three times more than non-subscribers. Analysts predict Uber’s revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will grow at CAGRs of 15% and 28%, respectively, from 2024 to 2027. With a valuation of just 18 times next year’s adjusted EBITDA, its potential for further growth remains strong.
2. Costco
Costco, the largest warehouse club retailer, operated 905 warehouses at the end of its latest quarter, an increase from 890 in 2024 and 795 in 2020. Its cardholder numbers surged from 105.5 million to 136.8 million, with global renewal rates improving from 88% to 90.5% over the same period. Revenue increased at an 11% CAGR and earnings per share (EPS) grew at a 16% CAGR, reflecting sustained momentum even after a membership fee hike in 2024.
Costco’s high-margin membership fees allow it to sell products close to breakeven, attracting more shoppers and fostering growth as it continues to attract new cardholders and maintain high renewal rates. Analysts expect Costco’s revenue and EPS to grow at CAGRs of 8% and 10%, respectively, through fiscal 2027. Despite appearing expensive at 49 times next year’s earnings, its enduring strengths warrant this valuation premium.
3. MercadoLibre
MercadoLibre stands as the leading e-commerce platform in Latin America, serving over 100 million unique annual buyers and 60 million monthly active users across its fintech services as of the end of 2024. The company, which operates in 19 countries, generates the bulk of its sales in Brazil, Argentina, and Mexico. It experienced a revenue CAGR of 51% from 2020 to 2024, driven by increasing internet access and income across the region, alongside greater adoption of its fintech services.
MercadoLibre’s early mover advantage and the expansion of its logistics network have helped it fend off competition from global firms like Amazon and regional players. It achieved consistent profitability over the past three years by enhancing its third-party marketplace and leveraging scale to reduce costs. Analysts forecast that from 2024 to 2027, MercadoLibre’s revenue and EPS will grow at CAGRs of 28% and 34%, respectively, making it a promising investment, still fairly valued at 35 times next year’s earnings.
Leo Sun holds positions in Amazon and MercadoLibre. The Motley Fool has investment positions in and recommends Amazon, Costco Wholesale, MercadoLibre, and Uber Technologies. Read more about our disclosure policy.
