Grubhub Is Credit Suisse's Favorite 'Trump Trade'


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Paul Bieber of Credit Suisse named GrubHub Inc (NYSE: GRUB), the leading online food delivery company, as his "favorite Trump trade" — that is, a top investment idea likely to benefit from President-elect Donald Trump's presidency.

Bieber also initiated coverage of Grubhub with an Outperform rating and $48 price target.

6 Reasons

According to Bieber, Grubhub is well positioned to take advantage of the large secular shift toward the online food ordering market for six main reasons:

    1. The market is very large with a currently low penetration rate of less than 5 percent.
    2. The market itself is very attractive with high incremental margins given Grubhub's healthy unit economics with low incremental expenses other than credit card feels and delivery expenses.
    3. The market is appealing given the increasing marketplace take rates (commissions), which serve as a sign the market is currently undermonetized and restaurant owners are willing to pay higher prices to drive incremental order volume.
    4. Grubhub could see a modest margin expansion in 2017 after its investments in the business hurt margin expansions in 2015 and slowed the margin expansion in 2016.
    5. Grubhub continues to make investments in delivery and expand its overall market opportunity.
    6. Earnings per share could gain on a potential lower corporate tax rate versus the company's current rate of around 40 percent.

At last check, shares of Grubhub were up 1.57 percent at $37.41.


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


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Posted In: Analyst ColorLong IdeasNewsPrice TargetInitiationRestaurantsAnalyst RatingsMoversTechTrading IdeasGeneralCredit SuisseDonald TrumpFodo StocksfoodGrubHubOnline Food OrderingPaul Bieber