What: Just Eat has grabbed a lot of headlines recently, after the latest index shuffle saw the fast food tech star promoted to the FTSE100. The firm has experienced a meteoric rise since it floated just under four years ago and is showing no signs of losing focus.
The takeaway delivery app firm is successfully combing and riding two waves, firstly of the UK’s fast-moving dining tastes and secondly the smartphone revolution. The successful combination of these two factors has seen the stock increase from a market cap of £1.6 billion at its IPO in February 2014, to a £5.4 billion mammoth takeaway delivery giant, which has a market cap larger than Marks & Spencer.
The firm has achieved this incredible growth through a series of well thought out equations. The latest of which, the Hungry House, has just recently been given the all clear by the Competitions and Markets Authority earlier this month. There is reason to think that the fast-paced growth can continue. Firstly, as we have seen in previous economic downtrends, takeaway services tend to do well when the economy is under pressure.
This is because the squeezed consumer replaces more expensive restaurant visits with at home takeaways. With Brexit inflation set to remain high, economic growth low and consumer wages stagnant, conditions are ripe for takeaway success. Secondly, 51% of takeaway orders are still placed over the phone. This means there is still a significant untouched market share, which Just Eat stands poised to tap into.
Thirdly, expectations are running high that JustEat’s new boss can deliver. Broker UBS confirmed this, by hiking the stocks target price from 740p to 910p on expectations new CEO Peter Plumbs will bring about product improvement and increased investment in delivery services, which should strengthen its market position and revenue prospects.
How: The stock has risen from just 240p in 2014, to 794p today. The last 12 months the JustEat has rallied over 40% and the last 3 months, over 14%. Long term momentum is definitely on this stocks side. However, it has eased off its all-time high of 827p hit mid-September, with this pull back providing a good buying opportunity. The stock remains comfortably above its 50 SMA of 757.50.
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