Since Donald Trump’s election victory, investors have been busy trying to separate the stock winners from the losers. Consequently, certain stocks and sectors have been aggressively sold off, which I think has opened up two potentially lucrative opportunities for my Stocks and Shares ISA.
Uber
First up is Uber Technologies (NYSE: UBER). Shares of the ride-hailing giant have fallen 7% since the election.
This follows reports that Trump wants to relax autonomous vehicle (AV) regulations, which would benefit Tesla‘s robotaxi network ambitions. This is a potential risk to Uber’s business model, but one which I think is still some years away.
Elon Musk has mentioned 2026/2027 just to start producing AVs. Yet rival Waymo is already doing over 150,000 driverless taxi rides a week, and would also stand to benefit from the easing of AV regulations.
Next year, Waymo will expand its robotaxi service to Austin and Atlanta, exclusively on the Uber app. Meanwhile, many other leading AV firms have also signed partnerships with Uber, which now has 161m monthly active platform users.
Wall Street expects Uber’s revenue to continue growing double digits long into the future, with profits motoring much higher.
We continue to advance our autonomous strategy, demonstrating how Uber can help unlock this exciting technology for the world.
Uber CEO Dara Khosrowshahi, Q3 2024
The price/earnings-to-growth (PEG) ratio, based on forecast earnings for the next 12 months, is 0.7. Anything under 1 suggests a growth stock might be undervalued.
As such, I might add to my holding if Uber if weakness persists.
Novo Nordisk
Next up is Novo Nordisk (NYSE: NVO). This is the pharma giant behind Ozempic, which treats type 2 diabetes and helps weight loss, and Wegovy, which is specifically approved for managing obesity. Both are known as GLP-1 receptor agonists.
Novo stock’s fallen nearly 7% since the election and is down 30% since June. The recent slide is due to Trump nominating Robert F Kennedy Jr to be the next US health secretary.
As well as being a vaccine sceptic, he’s not a fan of weight-loss drugs. Instead, he thinks the government should promote healthy eating.
The risk here is that his potential appointment prevents these expensive treatments being covered by Medicare (they’re currently not for obesity). That could cap the US market opportunity.
Now, I support healthy eating campaigns and tackling dangerous ultra-processed food. But 74% of Americans are currently overweight or obese, according to government figures. Unfortunately, I doubt healthy meals are enough for many of these cases. Effective treatments are needed, and Novo Nordisk’s the global leader in GLP-1 anti-obesity therapies, with a 65% market share.
In Q3, Wegovy sales surged 81% year on year. And it’s just been launched in China, where around 180m people are living with obesity.
While the product’s priced significantly lower than in the US, it still represents a substantial market opportunity. According to a report from JP Morgan, these GLP-1 drugs could also end up treating heart and kidney disease, alcohol addiction, osteoarthritis, and even Alzheimer’s. A true potential wonder drug!
After its recent drop, the stock’s trading at 26 times forecast earnings for 2025. For a company leading the global anti-obesity drug market, that valuation appears pretty attractive.
I have a list of candidates for my ISA in December and this one’s near the top.
