Today, I’m taking a fresh look at the company and asking whether this weakness could represent an opportunity in advance of next week’s Q3 numbers (due 20 October).

Deliveroo share price: time to hop on board?

Based on its most recent set of numbers, Deliveroo certainly looks like a compelling growth play. 

Back in August, ROO revealed that the value of orders placed using its platform had more than doubled in the first six months of its financial year to £3.39bn. Importantly, the company also said that it had seen “no material impact” from the reopening of restaurants in Q2. This was always one of my biggest concerns with the stock and suggests that there has now been a permanent shift in consumer behaviour.

A spate of deal-making in recent months has also been very encouraging. Building on its existing partnership with German discounter Aldi, ROO has recently hooked up with another supermarket, Morrisons, to offer a rapid delivery service (Hop) in southwest London initially, 

Clearly, any signs of initial success with this initiative and news of more deal-making next week could reassure holders. It could also succeed in helping the Deliveroo share price recover its mojo after a wobbly September.

On the other hand…

As positive as recent developments have been, there are also a number of reasons to steer clear. Perhaps the most pressing of these is that investors are taking flight from previously-loved growth stocks such as ASOS, partly due to concerns over cost inflation and supply chain hold-ups.

One might rationally argue that Deliveroo is operating in a very different area. But it’s still part of the next-gen, tech-based business wave. What worries me is that ASOS is profitable. Deliveroo won’t be for some time. This makes it harder to accurately value its stock, and this ‘jam tomorrow’ strategy could really backfire if we see a rise in interest rates to quell inflation.

Competition is another concern. We’re not only talking Just Eat or Uber Eats here. Across the UK and Europe, new firms promising ultra-fast delivery have sprung up, attracting customers with big initial discounts. That means margins will likely be very small for everyone involved. It also makes ROO look unexceptional.

Interestingly, JP Morgan recently cut its target for the Deliveroo share price to 320p from 393p. That’s not encouraging in the run-up to next week’s update. However, it may be more realistic considering the challenges ahead. And to be fair, it would still give me a 15% gain from here.

My verdict

The Deliveroo share price still languishes far below its IPO value (390p). So long as the firm is able to continue winning market share and show progress towards making a profit, I think there’s a good chance of the company getting back to this level in time. The question, however, is just how long investors will be patient.

As things stand, I think we might see a brief rally on 20 October. That said, I’m still not tempted to buy today. To really get me interested, the Deliveroo share price needs to fall significantly.

I feel ROO definitely isn’t a bargain today.

The post Is the Deliveroo share price a bargain ahead of next week’s update? appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS, Deliveroo Holdings Plc, Morrisons, and Uber Technologies. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I wonder if Just Eat Takeaway (LSE: JET) is a better choice for my portfolio right now.

Deliveroo’s slow start

Deliveroo appears to be gaining popularity among retail investors, rising this week from a low of 242p. I am also impressed by the Amazon-backed company’s 2020 revenue of £1bn — up 54% year-on-year. This was made even more impressive by the fact that its losses did not widen in this period. For these reasons, it could be a strong growth stock going forward.

But my pre-IPO concerns began when notable investors, Aberdeen Standard and Aviva, said they would not be taking part in Deliveroo’s float. Deliveroo shares were then priced between £3.90 and £4.10 instead of the £3.90 to £4.60 range originally planned. 

This problem derived from a report that found Deliveroo ‘riders’ can earn less than £2 an hour, while CEO Will Shu bags millions. 

This issue continues to plague the firm. 

A tasty alternative

Across the sea is a strong UK-listed rival to Deliveroo but headquartered in Amsterdam. Just Eat Takeaway is the post-merger remodelling of UK-based Just Eat and Dutch Takeaway.com. The merger took place a year ago. 

Just Eat suffers from a lot of the same issues that many delivery companies do: 

• Its 2020 losses amounted to £129.5m.
• Gig workers’ rights issues have plagued the business. 
• Food delivery is a heavily saturated market, in my opinion. Most participants in this sector engage in a race to zero in a bid to outprice each other. 

So, why do I think Just Eat is a better investment than Deliveroo?

Despite 2020 losses, orders soared 40% to 588 million deliveries, followed by Q1 2021 orders soaring a further 79%. This represents a 695% year-on-year increase in the first quarter of 2020. The Just Eat/Takeaway.com merger also gave the business a strong foothold in the UK and Europe. Just Eat recently partly ironed out its gig-worker issue and is permanently hiring many of its delivery riders. Just Eat has been a publicly traded company since 2014, and is a well-established stock. This means that there is less volatility in its share price. 

It has also reacted well to increased competition. In the UK alone, the company processed 64 million orders in Q1. New partnerships were also signed with brands such Chipotle and Starbucks, adding to Just Eat’s growing restaurant supply.

As of March 2021, it boasted more than 52% market share in the UK, compared to Deliveroo’s 22%. 

Should I buy Just Eat shares?

Just Eat shares have remained relatively flat in the past 12 months, from 7,854p in April 2020 to roughly 7,800p now. However, with a P/E ratio of -99.5x through March 2021, this shows that the company has negative earnings. This means that it is losing money, and if that remains consistent long term, it could be cause for concern.  

On top of this, I believe that the food delivery business model is caught in a dangerous competitive race. Essentially, I expect the entire industry to continue undercutting itself until losses become too much. Although Just Eat is in a strong position, the industry is not one that I am comfortable adding to my portfolio. 

Instead, I am looking to invest in these three UK shares in April.

The post Is Just Eat stock a better buy than Deliveroo shares right now? appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

The Motley Fool UK has recommended Just Eat Takeaway.com N.V. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Buy the dip?

One reason for thinking that we may have already seen the worst is that Deliveroo’s current valuation (£4.8bn) is now far more sensible than its price at IPO (£7.6bn). That’s clearly a lot more palatable for prospective investors looking for stocks boasting market-leading tech. On top of this, I can’t ignore that the firm has been growing revenue like the clappers over the last few years. It also operates in 12 countries, giving the Will Shu-led business some geographical diversification. 

Another reason for thinking the Deliveroo share price might stabilise (and eventually rebound) is that other tech-related stocks have done just that. The share prices of US social-networking giant Facebook and ride-sharing specialist Uber famously tumbled on their market debuts. They’ve since recovered strongly. Indeed, the former is now one of the biggest listed companies in the world! Sure, other previously-hyped UK stocks such as Aston Martin show that recovery is far from guaranteed. Nevertheless, Deliveroo’s existing investors can take heart knowing that it’s not impossible. 

That said, there are still a lot of things that bug me. 

Reasons to steer clear

Surely one of the biggest drawbacks to investing in Deliveroo remains the competition the company faces. Rival Just Eat Takeaway.com has 10 times the number of active customers. Even so, this isn’t reflected in the valuations of the two businesses. (£11bn vs Deliveroo’s £5bn). Having been around longer, the former also has a financial track record that we can properly scrutinise.

Speaking of which, Deliveroo still doesn’t make a profit. Now, that’s not held back other tech-related shares in the past. Electric car-maker Tesla is a great example. However, it’s worth reminding ourselves that these can be among the hardest-hit shares in the event of a market crash. Regardless of whether this happens soon, Deliveroo could still become a victim of the move towards value stocks we’ve seen over recent months.

Third, there’s the ongoing threat of industrial action by its riders. Indeed, one reason given for the shambolic Deliveroo IPO was that institutional investors were concerned over how its workers were being treated. Many will continue to keep their distance unless these worries are put to bed. This, in turn, could hold the share price back. 

On top of all this, the gradual lifting of coronavirus-related restrictions might make things tougher for Deliveroo going forward. After all, a lot of people look primed to spend in restaurants rather than on takeaways for the rest of 2021. Some (temporary) softening of demand looks inevitable. 

Better opportunities elsewhere

I don’t know where the Deliveroo share price is going in the near future. Nobody does. There are simply too many variables to take into account when trying to estimate where the company’s valuation will be in a few days or weeks. 

As a long-term investor, however, I still have significant doubts about the company’s ability to make me and other investors more money compared to other highly profitable growth stocks. 

Have we seen the bottom? I wouldn’t count on it. 

The post Have we seen the bottom for the Deliveroo share price? appeared first on The Twelfth Magpie.

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• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Facebook and Tesla. The Motley Fool UK has recommended Just Eat Takeaway.com N.V. and Uber Technologies. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Deliveroo’s history

Founded in 2013 by William Shu, the online delivery service is a giant in its market. Although it still operates at a loss, it has boasted encouraging growth in recent years, in line with Shu’s strategy of pumping cash into scaling up operations and business reach.

2020 losses shrank 40% to £224m, and in the first two months of 2021 transactions more than doubled in year-on-year value. While this seems encouraging for growth investors, there are some key reasons the IPO saw share prices slumping.

Reasons the Deliveroo IPO failed

Firstly, the IPO couldn’t have come at a worse time. The UK economy is finally opening up, with restaurants and pubs set to begin opening their doors on April 12. Food delivery services such as Deliveroo were able to capitalise on lockdowns as people wanted restaurant-quality food delivered to their homes. However, this won’t be the case as of a week’s time as people will be eager to eat out. Holding an IPO now seems bad timing when taking this into consideration.

In addition to this, March 31 was the final day of the first financial quarter of 2021. This is a very important time for fund managers. They tend to review their portfolios and rebalance positions. It’s certainly not the time to jump on board a volatile investment such as an IPO.

There are also ethical issues behind this IPO. Many top institutional investors including Legal & General, Aviva, and BMO Global announced they would be steering clear of the IPO due to the poor treatment of workers. Research by the Bureau of Investigative Journalism showed that a third of workers are paid less than minimum wage. This is largely down to the zero-hour contacts and ‘flexible’ pay structure of Deliveroo. Many long-term investors take this into consideration. They’re looking for more than just a profitable business. They want a solid ethical approach.

A final reason for the abysmal Deliveroo IPO is around the valuation of the company. The float was projected to increase Deliveroo’s total value to £7.6bn. The decline in share price that followed knocked a hefty £1.2bn off this. A market cap of £7.6bn would have meant the company was worth 6.4 times the previous year’s revenue. This seems rather steep considering rival Just Eat Takeaway.com is valued at only 4.8 times revenues.

So with all those negatives, why did the share price start to rise again after its plunge? Well, Deliveroo is a growing business and has strong potential. One plus point is that it has announced it will expand its grocery delivery service throughout 2021. This is the fastest-growing part of the business. The expansion will offer grocery delivery to an additional 125 towns and cities, taking the total to 300 for the UK. That could help it on its drive for profitability.

That said, bad timing, workers’ rights issues, and skewed valuation meant this IPO was always going to face a rocky ride. I won’t be adding any Deliveroo shares to my portfolio for now.

The post Why was the Deliveroo IPO so bad? appeared first on The Twelfth Magpie.

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• With a 7% yield, is this dividend share a no-brainer?
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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Dylan Hood has no positions in any of the shares mentioned. The Motley Fool UK has recommended Just Eat Takeaway.com N.V. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Shares in FTSE 100 stock Just Eat Takeaway (LSE: JET) were on the front foot this morning as the company revealed its latest set of full-year numbers to the market. Will this be enough to arrest the slide in the share price? I’m not so sure.

An “exceptional” year

Now, don’t get me wrong — today’s results were certainly striking. Revenue jumped 54% to €2.4bn in 2020. In addition to this, JET also reported adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of €256 million in the previous year. This represents a jump of 18% on 2019’s €217 million. Taken collectively, these numbers go some way to showing just how quickly the company (and sector) is growing.

As good as these results are, I don’t think we should be all that surprised. As CEO Jitse Groen reflected this morning, last year was “exceptional” for Just Eat Takeaway. With everyone confined to their homes due to lockdown restrictions, it was inevitable that relatively cheap treats like takeaways would prove popular. Accordingly, JET processed 588m orders in 2020 — up a colossal 42% from 2019. 

What’s perhaps more surprising is that this performance hasn’t really been reflected in the share price. Since hitting a peak in October last year, shares in Just Eat Takeaway have been on the slide.

So, will today mark the start of a sustained recovery?

Reasons to be bullish

Based on more recent trading, it’s certainly possible. Today, the FTSE 100 company said it expects “further acceleration” of order growth in 2021. This would appear reasonable given that UK orders were up 88% over January and February. Delivery orders also soared more than 600% compared to the same period in 2020.

Shares in JETS could also be boosted by the eventual sale of the firm’s 33% stake in fast-growing Brazilian food delivery startup iFood. The company has already received several bids from rivals — the best so far being €2.3bn.

Having said this, an investment in JET isn’t without risk.

Buyer beware

Arguably the biggest hole in the investment case for me is the fact that the company still doesn’t make a profit. A loss of €151m was recorded for 2020. While a lot of this is the result of the costs incurred from the Just Eat and Takeaway.com merger, things could get worse before they get better.

The FTSE 100 member may be market leader in the UK right now, but maintaining this position will still require significant ongoing investment, the spoils from which will only be delivered much further down the road. That might be acceptable for long-term investors but I don’t think anyone should ignore the opportunity cost of holding the stock in the meantime. The forthcoming listing of one of its biggest rivals won’t help matters. 

It may also be argued that Just Eat Takeaway’s purple patch could end once lockdown restrictions are lifted and we’re allowed to eat in restaurants once more. Takeaways will always be popular, of course, but a slowing of momentum seems inevitable if/when the good weather arrives and people are permitted to socialise freely again.  

Bottom line

As encouraging as today’s share price rise in Just Eat Takeaway is, I don’t think investors should get carried away. For me, there are far higher quality companies generating consistent profits elsewhere in the market more deserving of my capital. Only the patient need apply here, I feel.

The post This FTSE 100 share had an exceptional 2020. Here’s why I’m not buying now appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Just Eat Takeaway.com N.V. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

E-commerce has been the big winner from the pandemic, with many stocks surviving the stock market crash in relatively good shape. They may also benefit from lockdown 2.0, as the Government shuts more than 363,000 shops. I’d consider buying these two fast-growing UK shares that look better placed than most today.

People still have to eat in a pandemic, and if you are stuck at home, why not have the food brought to your door? Fast food delivery firm Just Eat Takeaway (LSE: JET) had fallen out of favour with investors before coronavirus, amid tough competition and concern over the wisdom of $7.3bn US acquisition Grubhub, but it’s flying again today.

Stock market crash survivor

The Just Eat Takeaway share price has recovered well from the March crash, jumping more than 50% from the lows of March. First-half earnings show demand surging in the spring lockdown, with revenues up 44% to €1bn. After years of rapid growth, and the Just Eat merger with Takeaway.com, the group is now a sizeable FTSE 100 company with a market cap of almost £13bn and international reach. Its latest results show the UK, Germany, Canada, Netherlands, Australia and Brazil performing particularly strongly.

The big question is whether it cracks America with Grubhub. If it does that, its share price could have much further to climb. Earnings are already forecast to rise 118% next year, and the pandemic is driving growth. You must be willing to pay a premium price though, in return for security against the next stock market crash.

Covid-19 has been a perfect storm for bricks and mortar fashion retailers. Shuttered stores, falling demand and squeezed incomes have wreaked havoc. Online fashion retailer ASOS (LSE: ASC) benefited from the first of these challenges and shrugged off the others, despite declining sales for formal and special occasion wear. 

Its share price slumped to a low of 1,095p during the stock market crash in March, but today stands at a mighty 4,593p. That’s a rise of more than 300%.

I’d buy top stocks to retire early

Last month, ASOS reported picking up 3m million new customers this year, lifting its active base to a mighty 23.4m. Pre-tax profits jumped 329% to £142.1m. Sales both in the UK and internationally grew strongly. The big question now is how well disposable incomes among younger customers survive the expected jump in unemployment.

Despite the ASOS share price surge, it isn’t massively expensive, trading at 35 times forward earnings. It looks better placed to survive the next stock market crash than many UK shares and I would consider buying it as part of a balanced portfolio to get rich and retire early.

The post Stock market crash part 2! I’d buy these top UK growth stocks to beat the lockdown and get rich appeared first on The Twelfth Magpie.

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• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS and Just Eat Takeaway.com N.V. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, profits are down as the £5.1bn FTSE 100 business has been investing heavily in future growth.

Eat that!

Just Eat is an investor favourite and understandably so, as its share price has soared 265% over the last five years. Many have become increasingly nervous, amid growing competition from UberEats and Amazon-backed Deliveroo. But news of the merger with Takeaway instantly lifted the share price by 25%, and this morning it put on another 2.5% as investors welcomed today’s update for the six months to 30 June.

Financial highlights included a 21% rise in orders to 123.8m, with Just Eat showing there’s still new business to be won by signing up 2m net new customers in the first half. Revenue rose 30% to £464.5m as customers ordered more. But the “leading global hybrid marketplace for online food delivery,” as Just Eat styles itself, is currently in the accelerated rollout of delivery stage, and this is eating into profits.

Harder to swallow

Profit before tax fell a whopping 98% to £800,000, down from £48.1m in the first half of last year, “reflecting planned investments in delivery and iFood.” Adjusted earnings per share (EPS) also fell 36% to 5.7p. Net cash generated by operations was down 15% to £65.9m.

Investors are focusing on the positives, and there are many, including more than 27m customers ordering an average of 8.7 times a year, up from 8.1 times. UK order growth recovered to 11.2% and its service now covers 50% of the addressable population in both UK and Australia, with 5,200 and 5,700 restaurants, respectively.

Canada is profitable with continuing positive order momentum, European markets are enjoying good growth, while iFood is showing triple digit year-on-year order growth. The group is expanding in Brazil and Mexico too.

It has also struck up new partnerships with Greggs and Asda in the UK, Domino’s in France and Burger King in Denmark and Ireland, while acquiring Practi in April and City Pantry in July. No wonder the Just Eat share price is up.

Expensive order

The board reconfirmed its guidance for full-year 2019 revenue in the range of £1bn-£1.1bn, excluding Brazil and Mexico, and interim CEO Peter Duffy said it’s now “the preferred food delivery app for our customers, with a broader choice of restaurants, a better user experience and a more personalised and impactful approach.”

Should you buy it? Last month, my colleague Roland Head said he would rather sell, as the Just Eat share price could struggle to live up to inflated expectations.

I have to agree, with the stock now trading at a barely digestible 77.1 times forecast earnings. It may justify that valuation – EPS are forecast to drop 48% this year, but City analysts are pencilling in a 95% rise in 2020.

Just Eat could well be on the road to global domination. The problem is at today’s price, even a minor setback could hammer the shares. 

The post The Just Eat share price is flying but I think you need nerves of steel to buy it appeared first on The Twelfth Magpie.

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• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Takeaway profit

Online takeaway ordering service Just Eat (LSE: JE) is a leading player in this sector, with operations overseas as well as in the UK. But the firm is without a permanent chief executive, after former boss Peter Plumb departed suddenly in January after just 15 months in the job.

Plumb’s unexpected departure doesn’t fill me with confidence in the outlook for the firm. Indeed, several things worry me about this business.

Competition in this sector is rising fast. Companies such as Uber Eats and Deliveroo are changing the market. I think Just Eat’s profit margins could suffer in this environment.

Indeed, the firm’s profit margins aren’t that high to start with. In 2018, its operating margin was only 14%, which is much lower than dominant online marketplaces such as Rightmove and Auto Trader.

At about 640p, Just Eat shares trade on around 75 times 2019 forecast earnings. Analysts expect profits to double in 2020, but I’m not sure how confident we can be in such bold forecasts. In my view, the current share price carries a significant risk of disappointment.

Unhealthy figures?

Middle East private healthcare group NMC Health (LSE: NMC) operates a network of private hospitals in 19 Gulf countries.

Since floating on the London market in 2012, NMC has grown rapidly, helped by a string of acquisitions. However, this growth has come at a price. At the end of 2018, net debt was about $1.5bn, or 3.1 times earnings before interest, tax, depreciation and amortisation (EBITDA). That’s well above my preferred maximum of 2.0x.

I’m also concerned that, on average, it took the company 96 days to collect payment on customer bills last year. That seems high to me.

Adjusted earnings per share are expected to rise by about 23% in 2019, which may help to justify the stock’s price tag of 18 times forecast earnings. Personally, I think this business looks expensive when its debt burden is factored in. I think there are better choices elsewhere in the healthcare sector.

Fancy a flutter?

When bosses at Paddy Power Betfair decided to rename the group Flutter Entertainment (LSE: FLTR) earlier this year, they were hoping to resolve confusion about the group’s numerous different operating businesses. These include UK bookmakers, online sports betting, and European and US gaming activities.

Flutter’s UK profits took a hit last year, when new regulatory restrictions on fixed-odds betting terminals (FOBTs). Chief executive Peter Jackson is hoping to reignite growth by expanding in the US as sports betting is gradually legalised.

He’s also taking a punt on more lightly-regulated emerging markets — recent deals have included the acquisition of a betting company in Georgia.

In my view, this strategy carries a fair amount of risk. Competition will be intense in the US market and many states have yet to legalise sports betting. Regulation can also change unexpectedly in emerging markets.

Flutter shares currently trade on 19 times 2019 earnings and offer a yield of just 3.3%. That makes them more expensive than most rivals. I don’t think this premium is justified. I’d place my bets elsewhere in this sector.

The post 3 FTSE 100 stocks I’d sell today appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Auto Trader, NMC Health, and Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

While no one can know for sure where things will go from here, I suspect the situations could get worse and may even lead to the £4bn-cap’s eventual demotion from the FTSE 100 (again). 

Competitive threat

Perhaps the biggest problem the 18-year-old company faces is competition from rivals Deliveroo and Uber Eats.

The former recently received significant investment from none other than Amazon. That’s problematic for Just Eat since it will allow Deliveroo to take advantage of the online giant’s delivery network. 

The threat from Uber Eats is more traditional in the sense that there’s every chance this part of the newly-listed ride-hailing giant could simply enter into a price war with competitors.

Talk of Uber Eats adopting a subscription-style model, whereby users pay a monthly fee for unlimited delivery, could really put the cat among the pigeons and heap more pressure on Just Eat at a time when its rate of growth appears to be slowing.

After the last couple of months, you might be tempted to think the shares now trade on an enticing valuation. Unfortunately, this isn’t the case at all. Based on a predicted 40% fall in earnings per share growth in 2019, the stock currently changes hands for a staggering 71 times forecast earnings. 

I’m not averse to paying up for quality stocks where there’s a strong possibility of growth for many years but, right now, I very much doubt Just Eat qualifies. 

There is, however, another FTSE 100 stock that just might.

Pricey…but worth it

Announcing record-breaking full-year figures to the market this morning was “life-saving technology” business Halma (LSE: HLMA). Operating in four sectors (Process Safety, Infrastructure Safety, Medical, and Environmental & Analysis), the £7bn-cap revealed revenue and profit were up for the 16th consecutive year.

Thanks to growth in all major regions in which it operates, the former came in at £1.21bn over the 12 months to the end of March. Adjusted pre-tax profit rose 15% to £245.7m.

Unsurprisingly, this prompted another 7% rise to the total dividend, bringing it to 15.71p per share. As highlighted by the company, this marks “the 40th consecutive year of dividend per share increases of 5% or more” and equates to a trailing yield of 0.81%.

While that’s very unlikely to appeal to income-focused investors, such consistent growth is indicative of a stonking business and arguably preferable to many high-yielding stocks in the market’s top tier. 

Halma continues to be a very cash generative company and boasts a solid balance sheet. I can’t see this situation changing anytime soon. Net debt fell by a little under 18% to £181.7m by the end of March, despite making four acquisitions and two small asset purchases.

According to CEO Andrew Williams, the new financial year has also “started well” with order intake continuing to be “ahead of both revenue and order intake for the comparable period last year.“     

As you might suspect, however, the stock doesn’t come cheap. A valuation of 34 times expected earnings before this morning means Halma will be too dear for many.

Nevertheless, should markets take a turn for the worse, I definitely think this company — with superior growth prospects — could be worth picking up.

The post After recent news, here’s one FTSE 100 growth stock I’d buy and one I’d sell appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Although the company has experienced a challenging recent past, it could now offer value investing and income investing potential. Alongside another FTSE 100 stock that released an encouraging update on Friday, it could be worth buying.

Growth potential

The stock in question is online marketplace for food delivery Just Eat (LSE: JE). Its first-quarter results showed a rise in orders of 21% to 61.4m. This was driven by continued marketplace leverage and an acceleration of delivery initiatives. As a result, its revenue increased by 28% to £227.9m.

Its UK orders increased by 7.4%, with an early Easter and warmer weather causing a degree of disruption that is not expected to continue over the medium term. International orders increased by 40%, with Canada continuing to be the company’s standout performer.

Looking ahead, Just Eat is expected to post a rise in earnings of 26% in the current year. Since the stock trades on a price-to-earnings growth (PEG) ratio of 1.3, it seems to offer good value for money.

With the popularity of online takeaway ordering likely to increase as consumers become more comfortable in using new technology, the company could be well-placed to generate continued growth over the long run. As such, now could be the right time to buy it.

Changing fortunes

As mentioned, the BT share price has disappointed in recent years. In fact, it has declined by 55% since the end of 2015. This means that it now trades on a price-to-earnings (P/E) ratio of 8.7. At a time when a number of FTSE 100 shares have relatively high ratings after a decade-long bull market, the telecoms company could have value investing appeal.

Of course, its financial performance has been disappointing in the last few years. Its profitability has fallen, while a large pension liability and significant balance sheet leverage mean that its risks may be higher than for many of its FTSE 100 index peers.

However, under a new management team that has a solid track record of performance, the stock could deliver a turnaround. Its dividend is covered 1.7 times by profit, which suggests that it is highly sustainable. With a yield of 6.6%, it offers an income return which is 250 basis points higher than that of the FTSE 100.

Therefore, while growth investors may not be positive about the company, BT could offer value and income investors a long-term opportunity to generate relatively high returns. As such, now could be a good time to buy it as a potential turnaround opportunity.

The post Why I think the BT share price is a cheap dividend opportunity worth buying today appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended Just Eat. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.