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I just saw this in the news section: Just Eat, a UK based online takeaway platform, benefitted on the back of Uber's loss in a fight over employees rights last week sending its shares up. Deutsche Bank have rated the company at "Buy" and upgraded the price target from 535p to 725p. "If the tribunal decision is confirmed we think these players could be faced with cost base inflation impedig their ability to compete. With its media only non delivery model Just Eat is not impacted by this issue and is best positioned in the online food ordering industry," said the analysts.
When this company was floated I recommended a strong buy on here. While pointing out that it was by traditional standards massively over valued, taking the nature of this business and the fact that the rest of the market is artificially inflated into context, there were many reasons in my mind to buy. I think now its more of a case of the general sentiment across the markets that will dictate what happens with these shares & despite recommending and being right about buying before I've always believed they were over valued. Where Just Eat gained a solid position in the industry so early, even though there may be other competitors, I believe that its unlikely for most fast food restaurants to turn down the extra business Just Eat can bring in a busy city. In my area (London) some takeaways are signed up to both Just Eat & Hungry House to benefit from more customers.. This is something else to consider - Although Just Eat is expensive for businesses, most consumers (who aren't necessarily looking for gourmet takeaway) use Just Eat and often haven't heard of other competitors.. As a restaurant owner would you use a cheaper competitor instead of just eat if they'd bring you 10 times less orders? I think of Just Eat as a company like BT & Openrech.. Only in the sense that they have this kind of position in the market where despite their high prices and likely poor service.. they offer something that often only they can, so many businesses use them whether they actually like them or not.. I don't think Deliveroo or Uber Eats is such a threat as they appeal to a different customer base often looking for higher quality food. Just Eat has a large following of customers and will probably do quite well.. but when the 'working class' stop buying as much takeaway food and the market peaks I imagine at least a 50% drop in value..
Got in around July this year, average price around 250.. Holding it with a profitable stop loss so I'm happy with whatever happens.. All you guys who were short might have made some short term gains .. But as I told you in July.. I thought it was going up.... Yes, stupid valuation.. But it went up didn't it... The market does not always work rationally.. Otherwise this stock would have tanked before... HOWEVER... I think you should short this stock now... I think its going to loose some of its high valuation and settle at a lower p/e ratio...
There will of course be people that would prefer not to use a company like Just Eat and continue contacting their existing takeaway(s) directly - However that is of course only one side of the story.. There is an increasing amount of people opting to use the services of Just Eat. There is a proven demand for their services and the fact that the company has continued to expand globally makes me optimistic about it's future and overall, fairly impressed with the progress so far. There are of course risks associated with investing in the shares of this company, with its high valuation.. So I am aware that there has been a consensus of overvaluation amongst many groups and I think initially this brought the price of the shares down.. However I think that the leverage that Just Eat has, skimming off fees from all these takeaway orders is starting to being appreciated by the market by investors a longer term idea. Just Eat has been outperforming the FTSE 100 & FTSE 250 over the last month. It is pretty easy now for someone to download their app onto their smartphone and make an order. It's not like no one would want to use this company.. and I would bet that the majority of their customers are happy rather than unsatisfied with their dealings with Just Eat and go on to use their service again and maybe recommend them. The 'Average Joe' does not know that Just Eat charge the restaurant 11-12% on their orders, and probably doesn't care as long as he gets his takeaway.