Why GrubHub, Inc. Shares Are Gorging on Gains Today

Is this meaningful or just another movement?

Jun 13, 2014 at 3:33PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of GrubHub, Inc. (NYSE:GRUB) are trading roughly 8% higher this afternoon after peaking at a gain of over 11% near lunchtime. GrubHub seems to be part of a rising tide of mobile-centric dining apps following in the wake of priceline.com's $2.6 billion acquisition  of OpenTable (NASDAQ:OPEN), which was announced this morning.

So what: OpenTable was bought at a near-50% premium its Thursday closing price, and GrubHub is currently valued quite similarly to the OpenTable buyout price -- its $2.8 billion market cap is within spitting distance of Priceline's $2.6 billion bid. Since both OpenTable and GrubHub help smartphone users get the food they want when they want it, investors who missed out on the OpenTable acquisition seem to be flocking to the similarly positioned GrubHub.

Now what: While OpenTable and GrubHub both serve hungry smartphone users and have similar valuations and their business models are somewhat at odds with each other -- OpenTable is targeted at users who want to sit down at a restaurant at a certain time, while GrubHub helps its users get restaurant deliveries from establishments that don't typically deliver their meals. GrubHub is also so new to the public markets (its IPO took place just two months ago) that it's somewhat less likely to be bought out in the near future. GrubHub's forward P/E of 200 is also nearly three times OpenTable's forward P/E of 75 following the acquisition, which may be too rich a price for potential acquirers to swallow. I'd stay on the sidelines for now.

Are you ready for this $14.4 trillion revolution?
Have you ever dreamed of traveling back in time and telling your younger self to invest in Apple? Or to load up on Amazon.com at its IPO and just keep holding? We haven't mastered time travel, but there is a way to get out ahead of the next big thing. The secret is to find a small-cap "pure play" and then watch as the industry -- and your company -- enjoys those same explosive returns. Our team of equity analysts has identified one stock that's ready for stunning profits with the growth of a $14.4 TRILLION industry. You can't travel back in time, but you can set up your future. Click here for the whole story in our eye-opening report.

Alex Planes has no position in any stocks mentioned. The Motley Fool recommends OpenTable. It recommends and owns shares of Priceline Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information