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Battle Of The Stocks: Yelp Vs GrubHub

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In this edition of Battle Of The Stocks, we look at two stocks in the online food delivery and reservation business, Yelp [YELP] and GrubHub [GRUB]. While Yelp has well over a million restaurants on its website, GrubHub is an established online ordering service.

The two companies are an online ordering platform that connects diners with restaurants. Here, we look at which stock is a better buy at current levels.

Market Cap

Driven by the massive increase in share prices, the market cap of Yelp and GrubHub have grown significantly since the start of 2016.

Shares of Yelp are trading flat this year driven by a 15% decline in Oct. 2018. The stock is however up 70% in the last 3 years and 50% in the last 18 months.

Comparatively, the GrubHub stock has gained over 250% since 2015 and 100% in the last 18 months. Despite a 36% decline in Oct., the stock is up 24% this year, easily beating returns of major indices.

This staggering climb in value resulted in billion-dollar valuations for the two companies. Yelp’s market cap is currently $3.5B while GrubHub’s market cap is higher at $8.1B.

However past returns are not an indicator of future price movements.

Revenue Growth

Revenue growth is a key indicator to gauge the financial position of any company. Any firm that can grow its revenue at a robust rate will be worth investing in.

Yelp reported sales of $844M last year and it’s estimated to rise 14% to $963M this year. Analysts expect its revenue to grow 18% to a robust $1.14B in 2019.

GrubHub, on the other hand, reported sales of $680M last year and analysts expect its revenue to grow 34% to $1.4B.

WINNER: GrubHub

Profitability

The profit margins of these online ordering portals have expanded, driven by a rise in revenue and operating efficiencies. While Yelp’s operating margin is estimated at 2.8% this year, it’s expected to be 5.4% next year.

GrubHub, however, sees the operating margin at an estimated 18.7% for the current fiscal, while it’s expected to be 18.5% next year

WINNER: GrubHub

Earnings Growth

While the two companies are looking to improve profit margins, analysts and investors are concerned over the earnings growth potential.

Analysts expect Yelp’s earnings per share (EPS) to grow 21% over the next 5 years. Comparatively, analysts expect GrubHub’s earnings to rise 27% over the same period.

WINNER: GrubHub

Analyst Recommendation

We have looked at key financial metrics for the two stocks. Let’s see what Wall Street analysts expect from the companies. Analysts have a 12-month average target price of $51.22 for Yelp, indicating an upside potential of 23%.

Comparatively, analysts expect GrubHub’s share price to rise to $296.94, providing an upside potential of 41% over the next year.

WINNER: GrubHub

It looks like GrubHub is a clear winner in this race. GrubHub is a better bet considering its profit margins and revenue and earnings growth rate. GrubHub also holds an edge due to a larger footprint and a solid reputation for customer service.

The food delivery segment is a high growth one with both companies looking to upstage the other and gain market share. We can see above that the domestic food delivery market is estimated to grow from $23.74B in 2016 to almost $40B in 2021.

Wealthlab Verdict: GrubHub (4-0)

Money

FAANGs Lose Over $135B Overnight

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The stock market was in a sea of red yesterday. The broader markets witnessed yet another correction. Stocks such as Facebook [FB], Apple [AAPL], Amazon [AMZN], Netflix [NFLX] and Google [GOOG], also known as FAANGs led the sell-off yesterday.

FAANGs lost over $135B in market value overnight. Analysts have raised concerns over Apple’s iPhone unit shipments. Several of them have cut iPhone shipment estimates and this has driven Apple shares lower.

Apple’s market cap has fallen from a high $1.1T to its current value of $882B. During its last earnings call, Apple had also stated that it will no longer provide data for device sales further adding fuel to fire.

Facebook trades at a two-year low

Facebook shares continue to burn investor money. Shares are down 13% this month and 20% since Oct. 2018. Facebook shares have impacted after an investigative report by New York Times accused the former of promoting anti-Semitic conspiracy theories.

Amazon shares fell declined over 5% yesterday. The stock faced the wrath of investors as it missed revenue forecasts last month. Netflix, on the other hand, has slumped over the last few months as there are concerns over the company’s international expansion efforts.

Have FAANG’s bottomed out?

FAANGs drove the markets for several years and generated spectacular returns for investors. A focus on developing innovative products and services have ensured market leadership for FAANGs.

However, since Oct. 18, these shares have declined significantly. FAANGs have lost a whopping $700B in market cap over the last 50 days. Does this mean that FAANGs have bottomed out and are trading at attractive valuations?

It’s too early to tell. We have seen that concerns over iPhone device sales, Facebook controversies, and decelerating growth for Amazon and Netflix have weighed in on stocks. Investors are now paying attention to fundamentals in an uncertain macro environment driven by rising interest rates and the trade wars between China and the United States.

Does this mean that the party is over? Certainly not! These companies are leaders in innovation and are expected to launch products and services that will help them maintain revenue growth in the near future.

Analysts estimates

Analysts though are still bullish on FAANGs. They have a 12-month target price of $233.47 for Apple, implying an upside potential of 26%. Similarly, shares of Facebook, Amazon, Netflix, and Google are trading 50%, 41%, 48%, and 32% respectively below their target price estimates.

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Money

3 Ways To Invest From Your Smartphone For Under $5

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The numbers say 80% of Millennials don’t invest in stocks.

Reason? Half say they don’t have money, one-third says it’s for “old white men,” another third says they don’t know how.

In addition to that, there’s demographic gap. “The average age of a financial advisor is 55,”Douglas Boneparth, a New York City-based financial planner last year. “There are more financial advisors over the age of 70 than there are under 30.”

Despite these beliefs, you don’t really need much money, nor experience, to get started. (Just look at our fearless co-founder Odunayo Eweniyi and what she’s pulled off here…)

Be that as it may, here are three ways to get started for $5 or less.

1. Stash

Image result for stash app

What: A micro-investment app (iOS and Android) with over 30 ETFs according to industry, sector and risk tolerance.

How it works: Download the app and choose your investment.

Minimum investment: $5

Cost: Fees range from $1 a month for accounts under $5,000 to 0.25% a year.

“We help people who don’t have a lot save money on a weekly basis,” CEO and co-founder Brandon Krieg said in one interview. “Stashers look like America, they look like people you meet every day: they are nurses and teachers and Uber and Lyft drivers.”

2. Acorns

What: iOS and Android app.

How it works: Download the app and choose one of six index funds. When you buy, say a cup of coffee for $1.75, it rounds up the change to $2 and deposits the difference.

Minimum investment: $5

Cost: Just like Stash, fees range from $1 a month for accounts under $5,000 to 0.25% a year.

“We’re not trying to preach austerity to the client, because that’s a bummer,” CMO Manning Field says. “Some people will say, ‘Don’t have the cup of coffee.’ We’ll tell you to have the cup of coffee and invest along the way.”

3. Robinhood

What: A commission-free investment app (iOS and Android).

How it works: Download and start buying stocks.

Minimum investment: Whatever stock you want to buy.

Cost: Free.

And by the way, if you want to get a fast start on real estate, here’s Forbes’ list of nine REITs with yields between 8% and 10%.

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Analyst: ‘Bitcoin Just Collapsed Like A House Of Cards…’

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Oh, how the mighty have fallen.

Ever since their mighty peak back in December, Bitcoin has seen a consistent plunge all year long, briefly dropping under $5k a coin today.

“Bitcoin collapsed like a house of cards on Monday,” Lukman Otunuga, research analyst at FXTM, wrote Business Insider in an email.

In fact, today’s drop continues a filthy week for Bitcoin, which has now dropped to a low not seen since December, right before the wicked explosion in prices that had Bitcoin as high as $20k per coin.

Once that happened, Bitcoin basically went mainstream, with “Blockchain” and “cryptocurrency” becoming words du jour. And once that happened, it basically created a frenzy around cryptos.

Just peep this. It’s not even a hockey chart, it’s just insanity.

 

Aaaaaand, here’s another showing the raucous trading activity back in December 2017.

All in all, Bitcoin lost 12% of its value in the past week and nearly 20% in the last three months.

For whatever it’s worth, it’s not just Bitcoin that’s taking a beating; other cryptos are getting slammed as well. Both Litecoin ($5.10 per coin) and Ethereum ($156/coin) are down 12%.

So, who else is bullish on crypto?!

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