This mobile restaurant platform is catching Wall Street’s attention (upgrades from Morgan Stanly and Cowen) and analysts expect double-digit growth for the next five years.
GrubHub (GRUB)
From Cabot Growth Investor
We’re adding GrubHub (GRUB) to the Model Portfolio. We think the perception surrounding GrubHub’s future has improved, not just because of a string of positive quarterly results, but also because of its recent deals with Groupon and Yelp to take over those firms’ online takeout ordering operations, which has re-set the competitive landscape in GrubHub’s favor.
The stock has impressively traded tightly since its big earnings surge more than two weeks ago, despite the wobbly market. There’s certainly risk if the market has a leg down in the near future; a pullback to 49 (where the 50-day line stands) or below (the prior base was in the mid- to upper-40s) isn’t out of the question if the market slides. But if things go right, we think the upside is tremendous as the company integrates its recent acquisitions and expands into more markets.
GrubHub has caught a couple of analyst upgrades this week, as Wall Street is growing fond of the firm’s potential in the wake of its three purchases (Foodler, Eat24 and OrderUp) of competitors this year; one analyst even thinks the buyouts (and boost in earnings power) could lift GRUB’s cash flow by 30%. We don’t know about that, but the stock continues to trade well after its huge-volume earnings breakout early last month. BUY.
Michael Cintolo, Cabot Growth Investor, www.cabotwealth.com, 978-745-5532, August 30 & September 6, 2017