Buy Lyft; it is undervalued with improving fundamentals, positive free cash flow, and strategic positioning in autonomous vehicle infrastructure.

Lyft, Uber, who are in roughly the same industry, and MGM Resorts. I am buying more of these stocks in 2026. This is because they are very cheap and I think their fundamentals will get better over time.

So, let's get to the first one, which is the elevator. You actually look at their price-to-earnings multiple. Look at the one-time issues here. It is now 2.3, but this number is probably a better indicator of the assessment.

The forward-looking price-to-earnings multiple is eight. The value of free cash flow on a future basis is about five. What this indicates is that the market thinks this company is truly in trouble in the long term.

The other thing you're seeing here is that the share price has fallen by about 25% in the last year. So, the multiples are starting to decrease , but look at some prime numbers.

The compound annual growth rate over the last 5 years is 23% and the 3-year compound annual growth rate is 16.8%. As I said, the idea here is that Lyft will be in danger because autonomous vehicles will disrupt this business.

I don't think that will happen and it does n't appear in numerology.

The three numbers you need to keep an eye on when it comes to elevators are the booking status. Bookings are how much revenue is coming into the system. When you pay $10 for a ride , Lyft does n't count that as $10 in revenue.

They actually calculate their take rate, which is around 20 to 25%. They count it as income. So, let 's say it's $2.50 in revenue, but it's a $10 booking. The extra $7.50 that goes to the driver is not counted as an expense on their income statement.

However, you can see what their booking status is. It's not just that it's growing quarter after quarter, but recently the pace of that growth has actually been increasing.

But, what is actually driving it? This is the number of rides and the number of riders. Active rider. Let's put the rides behind us for a moment. The number of active riders is actually increasing.

Over 30 million active riders. They did a few things. They have not only continued to grow in the United States , but have also expanded their operations internationally. Especially in Europe, where they are currently focusing specifically on the taxi market.

They bought a company called 'Free Now' last year. They've changed the name of it now , so it's fitting in a bit with Lyft's branding. But, 'Free Now' is essentially a taxi business.

So, a means of establishing a digital connection with taxis. It fits in quite well with the world of automated vehicles. So, when those taxi fleets are replaced by autonomous vehicle fleets , Lyft will be in a pretty good position in Europe.

I think we will see a lot of the same things happening in the United States. They have a partnership with Way in Nashville. They actually built a depot , so they have some of that infrastructure.

I think they are in a very good position and we are seeing that the number of passengers is increasing. The number of rides is also constantly increasing. There's a little less volatility on a quarterly basis , but you can now see that there are about a billion rides a year.

Another thing Lyft has going for it is positive free cash flow, with the business generating around $1.1 billion in free cash flow last year. It may be a bit volatile based on their insurance reserves , but it is a business that continues to be profitable and generate a lot of free cash flow.

That's exactly what we want to see. The balance sheet is also in a pretty good position. Currently, there is $1.8 billion in cash on the balance sheet. There is some debt, but it is about $990 million.

So, currently the net cash on the balance sheet is about $800 million.

So, when you look at their valuation, Lyft has a market cap of $5.9 billion , but their enterprise value today is only $5.3 billion. This gives them the opportunity to use the cash that is not only coming from revenue, but also accumulated on the balance sheet, so that they can acquire competitors.

They themselves may even be targets for acquisition. I've said before on this channel that I would n't be surprised if Wero or Jux bought them. This is a type of very low-risk acquisition.

You're getting 30 million active passengers. This could be a very good position for these companies in terms of automated driving.

So, I think Lyft fits everything you need. It has growth, margins are doing very well , there is positive free cash flow, the balance sheet is strong and today it is an incredibly well-valued stock.

They have a lot of partnerships in many automated vehicles. So, I think it will continue to act as that demand aggregator, even if we go to a world where you're using an agent to call a ride , where do you call for that ride ?

You might look at Uber or Lyft. This is something that many people do nowadays.

So when I look at the cheapest stocks in my portfolio , I see Lyft, Uber, and MGM Resorts.