Buy Uber or Avis Stock for Higher Highs?

Uber Technologies (UBER) and Avis Budget Group (CAR) recently saw significant stock surges, reaching near 52-week highs, driven by broader market optimism and company-specific strategic advancements. Uber's momentum is attributed to its expanded partnership with Waymo for autonomous robotaxi services in new U.S. cities, enabling its foray into autonomous mobility without substantial capital outlay, alongside its EV expansion initiatives. Avis's gains stem from its strategic pivot to enhanced EV fleet utilization, projected to boost operational margins and reduce maintenance costs, further supported by EV infrastructure investments and favorable import tariffs. While Uber forecasts strong sales growth with an FY26 EPS rebound, Avis anticipates a substantial 400%+ EPS recovery in FY26, which helps justify its current valuation despite a near-term earnings dip. Both companies currently hold a Zacks Rank #3 (Hold), suggesting continued upside for existing investors, though a market pullback could offer more attractive entry points.

Analysis

Uber Technologies (UBER) and Avis Budget Group (CAR) are exhibiting significant upward momentum, with stock prices near 52-week highs following substantial single-day gains of 7% and 17%, respectively. This performance is fueled by a combination of favorable macroeconomic sentiment and company-specific strategic initiatives. For Uber, the key catalyst is the expansion of its capital-light autonomous vehicle strategy through a partnership with Waymo, allowing it to advance in the robotaxi sector without direct technology development costs. While Zacks projects strong top-line growth for Uber, with sales forecasted to rise 15% in both FY25 and FY26, its earnings are expected to contract to $2.90 per share in FY25 before rebounding 22% in FY26. Uber's valuation, at a 29.4X forward P/E, is not considered excessively stretched against the market. Avis's rally is predicated on a strategic shift towards an EV-centric fleet to improve vehicle utilization and lower maintenance costs, thereby enhancing margins. Avis also benefits from import tariffs that increase the value of its used vehicle sales fleet. The company's financial trajectory shows a slight sales dip in FY25 but a dramatic earnings forecast, with EPS expected to surge over 400% to $13.84 in FY26. This anticipated earnings explosion provides justification for its currently elevated 54.7X forward P/E multiple.

Key Decisions for Investors

• Given that both stocks are trading near 52-week highs on strong bullish sentiment, new investors should exercise caution, as a pullback could present more attractive entry points.
• For Uber, the primary focus should be on the execution and scalability of its autonomous robotaxi partnership with Waymo, while being mindful of the projected EPS contraction in FY25 before an expected recovery.
• The investment case for Avis is heavily dependent on the realization of its forecasted 400%+ EPS rebound in FY26; investors should closely monitor operational performance and cost-saving metrics from its EV fleet strategy to validate the current premium valuation.
• Current holders of UBER and CAR may consider maintaining their positions to capitalize on the ongoing momentum, as the Zacks Rank #3 (Hold) suggests it may be premature to exit the rally.