There are two technology-based companies that have seen enormous success in July with some of the best growth in the FTSE 100 this past month. And their names? Vodafone (LSE: VOD) and Just Eat (LSE: JE).
I’m confident they’re making the right growth decisions to bring short-term and long-term success. These are companies that I would want to invest in for years ahead as I want to watch them grow even further.
Vodafone shares rose 16% in July, largely due to plans to create a European towers business that sparked optimism among investors who had previously been holding back from the shares.
Importantly too, Vodafone is ahead of most mobile operators in rolling out the sought-after 5G network in seven UK cities already. The company is hoping to reach more by the end of the year and is only just behind BT-owned rival EE, showing how these two operations are leading the trend. Will 5G take over the world? It all depends on whether customers are willing to pay extra for the faster network or maybe whether operators end up offering it for the same price as 4G as it becomes the norm. My prediction is that it will soon replace 4G.
Some investors have been disappointed by Vodafone this year though. In May, it cut the dividend by a significant 40%. However, I see this as a positive move to cut down on astronomical debt levels that currently stand at around £28bn. I see a company that’s making wise decisions that should benefit long-term investors.
Despite the dividend cut, the yield is still 5.6% which is higher than the FTSE 100 average. The P/E ratio of 31 suggests Vodafone shares are expensive, but the tower growth strategy and recent sensible company decisions lead me to believe it’s a worthy investment and that future share price growth should bring that P/E down for investors buying now.
Just Eat (LSE: JE) shares climbed a huge 25% at the end of July after news of a share merger with Takeaway.com. This would leave Just Eat shareholders owning 52.2% of the combined company, which is valued at a healthy £10bn. The news caused a stir with one analyst describing the to-be-combined company as a “European powerhouse”.
Just Eat has been performing well in the first half with a 21% rise in orders and revenue rising 30% to £464.5m and together, Just Eat and Takeaway.com really do appear to be a force to be reckoned with. In 2018, the companies had a combined total of 360m orders. The share price for Just Eat has grown 23% just since the merger announcement. The company is trading just 7.4% off its six-month high of 787p, which I am confident it should soon beat.
Its recent partnership with Greggs and its infamous vegan sausage roll has boosted sales for the company and I believe that this partnership should give it the leading edge it needs against rival Uber Eats.
But is Just Eat a good buy for investors today? Its P/E ratio is a terrifying 61, but analyst predictions means this dropping to a more manageable 35 by the end of 2020 if the share price doesn’t move. Does this make me want to wait? Not really. I think it’s worth investing now as I expect the shares to continue to rise as the fruits of this merger develop.
fional has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.