Why Adding Lyft Stock to Your Portfolio Could Be a Wise Move

Ride-hailing company Lyft, Inc. (LYFT) has shown a promising performance in the last six months, and it seems poised to maintain that growth. The stock has delivered significant appreciation, making it an attractive option for investors looking to diversify their stock portfolio.

A Glimpse at Lyft's Performance

When we look back at the recent trend of Lyft's shares, we notice a 28% rally in a six-month period, outperforming the 12.2% growth of its industry peers. This indicates that Lyft has outstripped others in terms of stock price growth.

The Investment Appeal of Lyft

Lyft holds a Zacks Rank #2 (Buy) and a VGM Score of B, suggesting that it is a solid pick for investors. Research indicates that stocks with a high VGM Score, combined with a solid Zacks Rank, tend to present the best investment opportunities.

Analysts have shown their confidence in Lyft by revising six estimates for the year 2023 upwards in the past 60 days, without any downward revisions. Such positive adjustments signal strong prospects for the company's future earnings, shown by a 42% increase in the Zacks Consensus Estimate for 2023 earnings over the same period.

Moreover, Lyft has a history of earnings that exceed expectations, having surpassed the Zacks Consensus Estimate in three out of the last four quarters, which further bolsters its investment case.

Growth and Operational Improvements

For the year 2023, the projected earnings indicate over 100% year-over-year growth, with an expectation of a 13.5% increase in 2024. A factor contributing to Lyft's stock potential is the increase in driver supply, allowing the company to enhance its service capacity. Active drivers have been quite productive, generating 17% more rides compared to three years prior.

Lyft has experienced a 10% year-over-year rise in active riders, which boosted its top line during the third quarter of 2023. The company foresees continuous growth in ride numbers, projecting a mid-single-digit revenue increase in the next quarter.

David Risher, Lyft's new CEO, is taking measures to improve Lyft's fortunes by ensuring competitive pricing and reducing costs. Additionally, Lyft is exploring new revenue streams, like introducing advertising on its app.

Considering Other Stock Options

While Lyft certainly stands out, other stocks like Air Canada (ACDVF) with a Zacks Rank #1 (Strong Buy), and SkyWest (SKYW) with a Zacks Rank #2 (Buy), are also worth considering. Both companies are experiencing positive traffic trends and have plans that indicate potential for growth.

Investing, Lyft, Stock