Lockdown measures have ripped a strip off the global economy but not all shares have taken a whack. The takeaway industry, for example, has benefitted greatly from the mass closure of restaurants. It looks as if players in the sector will continue to report a bustling trade too, which is good news for some FTSE 100 stocks.
A recent survey from GlobalWebIndex illustrates this point. Some 21% of its respondents said they plan to use food delivery services more frequently from now on. Conversely, around 40% suggested that they will eat out at restaurants less often.
It’s not just overhanging public health fears following the pandemic that is likely to push people from eating out to buying takeout instead. It’s that tough economic conditions will likely encourage people to save money by ordering something in rather than visiting a restaurant.
A FTSE 100 star
Just Eat Takeaway (LSE:JET) is a great way to play this theme. Indeed, the takeaway industry in its European markets has grown at such a rate over the past decade that the firm’s shares trade on the FTSE 100.
The company has a significant position in some of the world’s largest takeaway markets like the UK, Germany, and The Netherlands. And this week it went one step further by agreeing to take over US food delivery mammoth GrubHub for $7.3bn. The accord will create “the world’s largest online food delivery company outside of China”, Just Eat Takeaway says.
Now the British company’s shares don’t come cheap. At current prices they command a forward price-to-earnings (P/E) ratio of 153 times. But I reckon Just Eat Takeaway’s mammoth sales opportunities merit a healthy premium.
Surging silver
If you’re put off by the Footsie firm’s high cost, then Fresnillo (LSE: FRES) might be more attractive. Right now the silver miner reads on a forward P/E multiple of above 37 times. This isn’t exactly cheap either. But it’s a fair reflection of the bright outlook for precious metals prices in the 2020s.
In times of great economic upheaval so-called flight-to-safety assets like silver come into their own. Demand for the shiny metal ballooned in 2019 as a sharp economic cool down in China, bumpier US-China trade relations, and Brexit all shook investor nerves. Not only do these issues remain very much in play, but the Covid-19 pandemic has darkened the macroeconomic and geopolitical outlook for the 2020s even further.
It’s likely that silver prices will continue to gain ground in this environment. And precious metals are likely to receive a boost from the persistence of ultra-low central bank policy, too. Yesterday Federal Reserve Chair Jerome Powell said that the bank – which has slashed interest rates to record lows in the wake of the Covid-19 crisis – was “not even thinking about thinking about raising rates”.
It looks like a long and hard road ahead for the US economy and the central bank there will, in line with countries across the globe, keep accommodative monetary policy in place for much of the new decade. And this bodes well for the earnings outlook over at Fresnillo.
