Even though the FTSE 100 index slumped through much of 2020, some stocks were in a good place. These included e-commerce stocks, food delivery providers, and packaging providers among others.
What changed in 2021
But 2021 started on a very different note for them. As the beginning of the end of Covid-19 became visible, investor interest shifted to stocks that had slumped in the months before. And 2020’s gainers soon fell. So when I saw the Anglo-Dutch food delivery provider Just Eat Takeaway (LSE: JET) is among the biggest FTSE 100 fallers in today’s trading, it was not surprising. At the same time, I think this is actually a good time to take a closer look at it. If the shares are still fundamentally sound, they may be great buys for me at relatively low prices.
Just Eat Takeaway makes progress
The latest update from Just Eat Takeaway was on the completion of its acquisition of Grubhub, through which it will gain entry to the US markets. It sounds positive on the development, stating that it “is now built around four of the world’s most attractive markets in online food delivery: the United States, the United Kingdom, the Netherlands and Germany”.
It has also recently been included in the S&P Europe ESG 350 index, which has been designed to assess the performance of companies that meet its sustainability criteria. Just Eat Takeaway qualifies because it now pays an hourly wage and provides insurance to its couriers. Also, it uses electric vehicles. ESG investing is gaining ground, and its power to impact stocks’ performance is not to be taken lightly. When Just Eat Takeaway peer Deliveroo’s IPO a few months ago received a poor response, its hiring practices were pointed out as a key weakness.
Falling share price is an opportunity
Despite these positive developments, the Just Eat Takeaway share price has dwindled. It has fallen more than 19% in the past year. And it is now trading at levels not seen since March, 2020 when the FTSE 100 index was at its worst place in years.
Of course the company is loss-making, but I do not think that is a correct reflection of the performance of a fast growing company that is increasing market share. I think profits can come over time and its share price will bounce back too. I feel now is a good time for me to buy the stock.
DS Smith is a long-term investment
Alternatively, I would consider paper and packaging provider DS Smith (LSE: SMDS). It has a different share price story. The share price is up more than 24% in the past year, possibly because it did not make consistent gains last year. It is obvious why. Its full-year results released earlier today showed a 1% drop in revenue for its financial year ending April 30. Further, its pre-tax profits also showed a sharp 37% decline. It explained these figures as a result first of Covid-19 and then rising inflation.
While it is positive in its outlook, it has highlighted rising prices as a risk. Overall though, I think the stock is one to consider for the long term as online shopping will grow further.
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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended DS Smith and Just Eat Takeaway.com N.V. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.