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Shares in Just Eat (LSE: JE) plunged this morning on the release of impressive full-year results. But forward guidance on profits fell below City analysts’ expectations because the digital marketplace provider for takeaway food plans to pump millions into the business in a bid to keep ahead of fast-moving and well-capitalised competition.

A powerful underlying trend in the market

On balance, I think the long-term growth story remains attractive and I see weakness in the stock price now as an opportunity to invest with better terms. As I write, the shares have settled around 8% down. Yet the figures are encouraging. Revenue rose 45% compared to 2016 and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is up 42%, although the firm is yet to make a statutory profit.

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Ordering takeaway food for delivery is a way of life for many and no longer just an occasional treat. I think that trend will continue and accelerate to underpin the growth opportunities for Just Eat and its competitors. But should we worry about the competition? Maybe, but last year’s acquisition of Hungryhouse strengthened the UK-facing part of the business and Just Eat could go on to take over more competing firms if it can keep the cash flowing in. Encouragingly, the firm said: Strong cash flow leaves us in a position of great strength, enabling investment in significant new opportunities.”

Big investments to defend and grow

In order to “insulate” the business from competition, Just Eat plans to plough big money back into technology so that the customer-facing websites and phone apps provide the best possible customer experience. There will also be “considered investments” into the delivery operations in the UK, Canada, Australia & New Zealand, and into building businesses in the company’s developing markets, which offer “significant growth potential.”

I reckon there’s more to come from Just Eat and consider the firm well worth your research time right now along with thermal processing services provider Bodycote (LSE: BOY), which also released full-year results today showing good progress. Revenue at constant currency rates lifted almost 10% compared to 2016 and earnings per share shot up 33%. The directors signalled their confidence in the outlook by pushing up the ordinary dividend 10% and paying a special dividend of 25p.

Trading well and growing

Chief executive Stephen Harris told us that Bodycote achieved its strong growth in the year via contributions from contract wins on automotive and aerospace programmes, “excellent” progress in Emerging Markets, and “broad-based” advances across the general industrial sectors, “an element of which was due to some customer restocking.”

Although the business has “limited forward visibility,” Mr Harris said that 2018 got off to a good start and Bodycote is trading in line with the directors’ expectations. Meanwhile, at today’s share price around 932p, the forward price-to-earnings ratio for 2019 sits close to 17 and the forward dividend yield is just over 2%. City analysts following the firm expect earnings to grow around 8% during 2019, and to cover the dividend payment almost three times, which looks healthy. I reckon the valuation is fair and the firm warrants close attention with a view to adding the stock to a balanced and diversified portfolio.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Bodycote and Just Eat. 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.

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