A strong run for bulls means a smooth ride for powerful leaders like Uber stock as investors look ahead to 2024.
The recent stock market strength may be more than just a Santa Claus rally, Jim Roppel, founder of the Roppel Report, tells Investor's Business Daily's "Investing with IBD" podcast. He points to market strength following a bearish cycle, and says that after each downturn, the market comes back stronger than ever.
"We will have opportunities in cyclical bulls, but not like this," Roppel said, underscoring his positive interpretation of the current market environment.
The market is giving off bullish signals, Roppel continued. "There's a lot of bad news out there, but the market is looking out ahead and saying 'things are going to get better.' "
Uber Stock Rallies As Market Rebounds
That market upswing bodes well for Uber stock, which surged 30% in November and is up another 12% so far this month.
"When a stock acts like this immediately following a bear market, it's telling you clearly (that it's a leader)," said Roppel.
While Uber stock's earnings growth isn't quite where he'd like it to be — the company only turned consistently profitable in recent quarters — he's taking his cues from the chart. "I'm following price more than anything else."
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Uber stock made its IPO in 2019 and fell to all-time lows during the Covid-19 pandemic as riders and drivers stayed home during lockdowns. The stock has since rebounded, and after 2022 has emerged from several periods of consolidation as a strong market leader.
Uber stock in early November broke out of a double-bottom base with a 49.19 buy point, fueled by its earnings report. Shares are now 28% above that pivot, according to MarketSmith.
Uber stock is currently ranked No. 4 in the Leisure-Services industry group, according to IBD research. The stock has an IBD Composite Rating of 85.
Roppel says Uber stock is also seeing institutional support, pointing to a mid-December spike in volume to accompany the stock's price gain.
The stock is 48% owned by funds, with the largest being JPMorgan Large Cap Growth Fund and Allspring Growth Fund.
Uber Stock Rides Opportunities In Transportation And Tech
Market bullishness is also creating opportunities for growth in transportation and leisure, which Uber stock could benefit from.
Leisure stocks like Carnival Cruise Lines are setting up potential entry points, with Carnival completing a 119-day cup base that could be set to forge a handle. Carnival is ranked No. 2 in the Leisure-Services group, according to IBD research, and boasts a Composite Rating of 94.
Uber stock's proximity to leisure and tech also means it's set to capitalize on new consumer trends as they emerge. "I have a lot of friends who are very young, and when I travel with them on vacation, they don't go out and pick up food, they order it," said Roppel. "These are revolutionary new technologies that are game changers we haven't seen before."
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