Just Eat shares were up at over 80p this morning as the company’s stock continues to surge. This is a stock that in late August was trading at around 90p. Since then it has left the FTSE 100 in its  dust. This month the company has been drawing criticism for introducing a 50p service charge for processing Just Eat orders, but the market does not seem to have been fazed by this.

Just Eat shares are leaving the FTSE behind

Just Eat shares have been promoted into the FTSE 100 which has resulted in much automated buying from the ETF market and other funds running on passive strategies. This has been a major boost and we would be surprised if you will see quite the same dynamic returns from Just Eat shares in the next six months as we saw in late 2017.

There is no ignoring the fact that Just Eat has brought a great deal of value to the lazy eater culture in the UK. Consumers are no longer restricted to deliveries from their local curry house – urban residents now have a much more diverse range of menus to choose from. Just Eat is the leader in this respect.

The decision to bring in a service charge, which replaces the passing on of a credit card levy, is being criticized, but we don’t see this undermining the fundamentals that are driving the Just Eat share price.

No post-Christmas hangover for Just Eat shares

But Just Eat shares should be viewed in a different light as well: we are expecting some very poor results from the UK retail segment in 2018 which will reward short sellers. Just Eat compares very well with traditional FTSE UK retail stocks, which we anticipate will be hammered in 2018.

Take for example Marks & Spencer – M&S shares have been heading southward and saw heavy selling in November. This is a landmark retailer in the UK, but shareholders of Marks & Spencer could be in for a rough year of it.

“This isn’t any retail decline – this is an M&S one,” observes Neil Wilson, Senior Analyst at ETX Capital. “As expected Marks & Spencer suffered a bad fall in sales over the Christmas quarter – badly lagging competitors on all fronts – and as such there could be serious question marks over Steve Rowe’s turnaround strategy.”

We anticipate the kerfuffle over Just Eat’s levy to pass as quickly as those New Year gym resolutions. If it is a UK retailer you are after, don’t look at bricks and mortar high street retailers with their cumbersome overheads, keep your eyes on Just Eat’s shares.


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11th January 2018
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