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After recent news, here’s one FTSE 100 growth stock I’d buy and one I’d sell

Shares in takeaway portal Just Eat (LSE: JE) have had a poor couple of months, falling almost 25% in value.

While no one can know for sure where things will go from here, I suspect the situations could get worse and may even lead to the £4bn-cap’s eventual demotion from the FTSE 100 (again). 

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Competitive threat

Perhaps the biggest problem the 18-year-old company faces is competition from rivals Deliveroo and Uber Eats.

The former recently received significant investment from none other than Amazon. That’s problematic for Just Eat since it will allow Deliveroo to take advantage of the online giant’s delivery network. 

The threat from Uber Eats is more traditional in the sense that there’s every chance this part of the newly-listed ride-hailing giant could simply enter into a price war with competitors.

Talk of Uber Eats adopting a subscription-style model, whereby users pay a monthly fee for unlimited delivery, could really put the cat among the pigeons and heap more pressure on Just Eat at a time when its rate of growth appears to be slowing.

After the last couple of months, you might be tempted to think the shares now trade on an enticing valuation. Unfortunately, this isn’t the case at all. Based on a predicted 40% fall in earnings per share growth in 2019, the stock currently changes hands for a staggering 71 times forecast earnings. 

I’m not averse to paying up for quality stocks where there’s a strong possibility of growth for many years but, right now, I very much doubt Just Eat qualifies. 

There is, however, another FTSE 100 stock that just might.

Pricey…but worth it

Announcing record-breaking full-year figures to the market this morning was “life-saving technology” business Halma (LSE: HLMA). Operating in four sectors (Process Safety, Infrastructure Safety, Medical, and Environmental & Analysis), the £7bn-cap revealed revenue and profit were up for the 16th consecutive year.

Thanks to growth in all major regions in which it operates, the former came in at £1.21bn over the 12 months to the end of March. Adjusted pre-tax profit rose 15% to £245.7m.

Unsurprisingly, this prompted another 7% rise to the total dividend, bringing it to 15.71p per share. As highlighted by the company, this marks “the 40th consecutive year of dividend per share increases of 5% or more” and equates to a trailing yield of 0.81%.

While that’s very unlikely to appeal to income-focused investors, such consistent growth is indicative of a stonking business and arguably preferable to many high-yielding stocks in the market’s top tier. 

Halma continues to be a very cash generative company and boasts a solid balance sheet. I can’t see this situation changing anytime soon. Net debt fell by a little under 18% to £181.7m by the end of March, despite making four acquisitions and two small asset purchases.

According to CEO Andrew Williams, the new financial year has also “started well” with order intake continuing to be “ahead of both revenue and order intake for the comparable period last year.     

As you might suspect, however, the stock doesn’t come cheap. A valuation of 34 times expected earnings before this morning means Halma will be too dear for many.

Nevertheless, should markets take a turn for the worse, I definitely think this company — with superior growth prospects — could be worth picking up.

Capital Gains

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. 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.