I came across a compelling stock investment opportunity a few weeks ago and I feel confident in sharing this opportunity with other investors. I have been following technology stocks for many years and feel that this area of the market presents many of the best growth opportunities in the stock market. This is because technology stocks are usually companies that are disrupting industries and providing significant improvements to their customers. The restaurant delivery market is one such area where technology/logistics companies are helping restaurants improve their sales significantly (by 20-30%) by bringing their dishes to customers homes and workplaces thereby increasing the number of customers they are able to serve at a given time.
There are many companies operating in this new industry as the market opportunity is huge given that all restaurants in the world can benefit from this service. The largest player in this industry is Grubhub which is a company that has a few brands that focus on specific regions of the restaurant delivery market. The stock of Grubhub has done very well in the past year growing from $60 a share to $114 and sporting a P/E of 80.
There are other smaller companies operating in this industry and one that I like is a company called Waitr that is being purchased by Landcadia Holdings (stock ticker LCA) in a deal that will be finalized at the end of the year and therefore resulting in Landcadia Holdings changing its name to Waitr. Currently Landcadia Holdings trades around $11 a share or 3 times next years sales once the combination with Waitr is completed. This is compared to Grubhub which trades at 9 times next years sales. So Waitr is trading for about a third of where Grubhub is trading at right now which is quite a significant discount.
I suspect a reason for such a discount is that the transaction of Landcadia buying Waitr has yet to be completed and as a result there are a lot of investors who are unaware of the deal and the fact that buying Landcadia now entitles the investor to effectively buying one share in Waitr after the transaction is completed. I started acquiring shares a few weeks ago and noticed that investor interest in the stock has grown substantially as the volume of shares trading hands has grown from an average of 100,000 shares a day to as high as 5,390,000. Yesterday as the stock market tanked the stock of Landcadia Holdings was actually up 4.27% which is surprising given the overall direction of the market. I think investors are catching on to this opportunity and are acquiring shares. I believe the stock of Waitr is worth about double where it is at right now and is a great candidate for Grubhub to acquire the company and add it to its portfolio of its group of companies. Other restaurant delivery companies could be interested in Waitr as well such as Just Eat which is based in the UK. If that were to happen and acquisition would have to do so at a premium to the share price of Waitr currently.
In conclusion the purchase of Landcadia Holdings is attractive at the price of around $11 to $12 given the capital appreciation potential in the shares as it changes to Waitr later this year. Good luck investing.