GRUB – Page 2 – WILLIAM O'NEIL+CO

Global Technology/Cyclical Sector–Internet and Media

Posted on October 17, 2018February 1, 2019 by Derek Higa

Some highlights from the report:

Consumer demand for online food delivery is growing. The Gross Merchandise Value (GMV) for online food delivery is expected to reach $147B, an 11% 2018–2022 CAGR.

There are two types of delivery models: aggregators and new delivery, both of which are expected to grow through 2022. Recently, aggregators have begun offering delivery services to complement their marketplace but at a higher cost to revenue.

As of June 2018, China contributes the most GMV for online food delivery globally, followed by the U.S., India, the U.K., and Germany.

China’s online food delivery market is almost twice the size of the U.S. market. Meituan holds the largest share.

The U.S. core addressable food delivery market is expected to reach +$200B by 2020, or 40% of total restaurant sales. Pizza delivery accounts for the majority of the TAM and nearly 50% are from phone orders, leaving plenty of room for online food delivery penetration.

In the U.S., Grubhub ( GRUB ), on our Focus List, is the leader with a market share of 34% in food delivery services as of July 2018.

Other publicly traded food delivery companies include Just Eat ( JE.GB ), Delivery Hero ( DHERX.DE ), Takeaway.com ( TKWY.NL ), and Meituan ( MEDI.HK ).

Lastly, given the current weak market conditions going into earnings season, we have provided annotated Datagraphs for several other U.S. ideas in the report, including support and resistance levels to keep in mind.

Market View

Posted on October 12, 2018February 1, 2019 by Raj Gupta

The U.S. market is in a Downtrend. The S&P 500 and Nasdaq closed below their respective 200-DMA this week in heavy volume. Multiple leading ideas also broke below their 200-DMA or long-term price support and will now need to consolidate for a number of weeks before providing more risk optimal entry points. The U.S. Focus List count has fallen from a yearly high of 80 names to 63 today, with eight (13%) still trading below their respective 200-DMA and at risk of removal. Going forward, we will be looking for a follow- through day to occur above Thursday’s intraday low before we recommend buying. This could happen as early as Wednesday, but until we see that occur, we recommend a defensive posture, avoiding new buys and selling ideas that have broken below long-term support.

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 63 ideas lost 5.8% on average this week, underperforming the S&P 500 ( -4.1% ) and the Nasdaq ( -3.7% ).
Actionable Focus List ideas: Centennial Resource Dvlp ( CDEV ), Lamb Weston ( LW ).
USFL ideas weekly earnings line-up:
Monday: Open: SCHW
Tuesday: Open: UNH
Thursday: Close: TEAM

By Sector
All sectors sold off heavily this week. Technology took the brunt of the selling, with multiple U.S. Focus List ideas falling by double digits,
including ALRM, BL, GRUB, NVDA, and ADSK. Tech ideas that held up the best include XLNX, ATVI, INTU, PANW, CRM, and ADBE,
though all of these ideas did break short-term support and will need to consolidate over the next several weeks. Consumer Staple ideas
held up the best on the list. MKC, LW, and NOMD are all trading within 10% of highs with RS lines moving higher. Select Retail ideas also
held up well, including WING and OLLI, which both remain above their respective 50-DMA.
New Ideas or Deletions
We added Lamb Weston ( LW ) and removed Tyler Technologies ( TYL ), CarGurus ( CARG ), Q2 Holdings ( QTWO ), Paypal ( PYPL ), Splunk
( SPLK ), Workday ( WDAY ), Yelp ( YELP ), Semtech ( SMTC ), and Old Dominion Fght Line ( ODFL ) from the U.S. Focus List this week.

US Focus Long

Posted on October 12, 2018October 15, 2018 by Midhun Parameswaran

The U.S. market is in an Uptrend Under Pressure. The Nasdaq broke its 50-DMA on Thursday, a level that had been holding as support for the last several months. Distribution increased and leading ideas pulled sharply back off highs with several breaking down technically and subsequently being removed from the U.S. Focus List. With the 100-DMA also undercut on Friday, the next level of support on the Nasdaq is now the July 30 low at ~7,600, before the 200-DMA. This poor technical action across the major averages and leading ideas alike warrants a cautious approach until market conditions stabilize and price action tightens up. Therefore, our recommendation is to reduce risk by trimming ideas that have broken below moving average and/or price support, while also locking in gains in ideas that have become well extended from prior pivot points.

US Focus Long

Posted on October 5, 2018October 6, 2018 by Raghavendra K

US Focus Long

Posted on September 28, 2018September 29, 2018 by Raghavendra K

The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to hold above short-term support levels. The Nasdaq has an elevated distribution day count at seven, however, three days expire within four sessions beginning next Thursday. To remain positive, we would like to see the Nasdaq hold above its 50-DMA and avoid further distribution as expiration approaches. Positively, underlying action among growth ideas has been strong this past week. Multiple ideas have begun to emerge from consolidation and move back into new highs. 64 of the 75 (85%) U.S. Focus List ideas are trading above their respective 50-DMA, 49 (65%) are trading within 5% of a new high, and 21 (28%) hit new all-time highs this week. We continue to recommend buying high quality ideas as they find support at key moving averages or as they emerge from sound bases.

Market View

Posted on September 21, 2018February 1, 2019 by Raj Gupta

The U.S. market is in a Confirmed Uptrend. The S&P 500 moved back into all-time highs this week, while the

Nasdaq held support at its 50-DMA. The majority of leading ideas also continue to hold individual levels of sup-
port or make new highs, though we have begun to see sector rotation over the past week. Energy, Basic Materi-
al, Consumer Cyclical, and Capital Equipment have come under accumulation, while previously leading sectors,

Technology and Retail, have paused, consolidating sharp gains over the last month. Our recommendation is to
continue holding core positions in high relative strength ideas, while also proactively locking in gains in ideas
that have rallied 20-25% or more above later stage pivot points. We maintain our positive view on the general

market, which will change should we begin to see technical deterioration in leading ideas coupled with addi-
tional distribution in the major averages.

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 74 ideas lost 1.4% on average this week, underperforming the S&P 500 (+0.8%) and the Nasdaq
(-0.3%).

Actionable Focus List ideas: Activision Blizzard ( ATVI ), Adobe Systems ( ADBE ), Align Technology ( ALGN ), Auto-
desk ( ADSK ), Calavo Growers ( CVGW ), Centennial Resource Dvlp ( CDEV ), Edwards Lifesciences ( EW ), Envestnet

( ENV ), Fidelity Natl Info Svcs ( FIS ), Home Depot ( HD ), Intuit ( INTU ), Nextera Energy ( NEP ), Nomad Foods
( NOMD ), Nvidia ( NVDA ), Old Dominion Freight Line ( ODFL ), Palo Alto Networks ( PANW ), Paypal ( PYP L), PRA
Health Sciences ( PRAH ), Q2 Holding ( QTWO ), Realpage ( RP ), Splunk ( SPLK ), Vertex Pharmaceuticals ( VRTX ),
Zoetis ( ZTS )
USFL ideas weekly earnings line-up:
Thursday: Open: MKC

Sector
Energy ideas within the U.S. Focus List led this week. FANG regained its 50-DMA, while CLR found support at its
200-DMA. NEP continues to trend along its 50-DMA, while CDEV remains technically intact despite pulling back
from its pivot point on Thursday. Payment processors also continue to act well. MA and V continue to make new
highs, while FLT, PYPL, WP, and GPN remain at or near new highs. Conversely, Technology ideas have pulled
back off extended levels. WDAY, GRUB, SPLK, NOW, RNG, QTWO, ADBE, NVDA, and TYL have pulled back to

their respective 50-DMA, while MPWR and GOOGL have broken below that same level of sup-
port. ADSK and ATVI still look strong technically and remain actionable. Retail ideas are also consolidating sharp gains over the past month. WING, LULU, OLLI, and FIVE remain extended, while HD is still trading within
a pivot. AMZN is trading ~7% off highs and testing support at its 50-DMA.

US Focus Long

Posted on September 21, 2018September 21, 2018 by Raghavendra K

The U.S. market is in a Confirmed Uptrend. The S&P 500 moved back into all-time highs this week, while the Nasdaq held support at its 50-DMA. The majority of leading ideas also continue to hold individual levels of support or make new highs, though we have begun to see sector rotation over the past week. Energy, Basic Material, Consumer Cyclical, and Capital Equipment have come under accumulation, while previously leading sectors, Technology and Retail, have paused, consolidating sharp gains over the last month. Our recommendation is to continue holding core positions in high relative strength ideas, while also proactively locking in gains in ideas that have rallied 20-25% or more above later stage pivot points. We maintain our positive view on the general market, which will change should we begin to see technical deterioration in leading ideas coupled with additional distribution in the major averages.

Market View

Posted on September 14, 2018February 1, 2019 by Raj Gupta

breaking out from consolidation over the past week. Despite positive price volume action in both the major av-
erages and individual ideas, we recommend reducing risk in stocks that have rallied 20-25% above later stage

pivot points. We will change our current positive view on the market should we begin to see technical deteriora-
tion in leading ideas coupled with additional distribution in the major averages

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 77 ideas gained 2.1% on average this week, outperforming the S&P 500 (1.2%) and the Nasdaq
(1.4%).
Actionable Focus List ideas: Activision Blizzard ( ATVI ), Align Technology ( ALGN ), Autodesk ( ADSK ), Calavo
Growers ( CVGW ), Centennial Resource Dvlp ( CDEV ), Chefs’ Warehouse ( CHEF ), Envestnet ( ENV ), Fidelity Natl
Info Svcs ( FIS ), Home Depot ( HD ), Intuit ( INTU ), Nextera Energy ( NEP ), Nvidia ( NVDA ), Old Dominion Freight
Line ( ODFL ), Palo Alto Networks ( PANW ), Paypal ( PYPL ), PRA Health Sciences ( PRAH ), Q2 Holding ( QTWO ),
Realpage ( RP ), Servicenow ( NOW ), Splunk ( SPLK ), SVB Financial ( SIVB ), Vertex Pharmaceuticals ( VRTX ), Zoetis
( ZTS )

Sector
Technology ideas within the U.S. Focus List led this week. Nineteen of 30 ideas hit a new high, including ATVI,

ADBE, AMD, BL, CRM, GRUB, MTCH, PAYC, RP, and TEAM. Though AMD, PAYC, and TEAM are now well ex-
tended from moving average support, ATVI and RP just turned actionable after breaking out this week. Energy

ideas also rallied, led by new addition CDEV which is breaking out from a 17-week cup. CLR and FANG are still

looking to regain their respective 50-DMA as they build new bases. Though Banks remain under pressure, Pay-
ment Processors within Financial continue to show positive technical action. GPN, MA, PYPL, SQ, V, and WP are

all trading at or near new highs. Conversely, though Retail remains a long-term leading sector, multiple ideas
on the U.S. Focus List have begun to consolidate after big gains over the last several weeks. FIVE, LULU, OLLI,
and WING are consolidating at highs, while HOME continues to decline and is now trading below its 200-DMA.

US Focus Long

Posted on September 14, 2018September 15, 2018 by Raghavendra K

The U.S. market is in a Confirmed Uptrend. The S&P 500 held support at its 21-DMA this week while distribution fell to just two days due to expiration. The Nasdaq held its 50-DMA and currently has five distribution days. Both indices will lose an additional distribution day next week. Leadership continues to act well, with new ideas also breaking out from consolidation over the past week. Despite positive price volume action in both the major averages and individual ideas, we recommend reducing risk in stocks that have rallied 20-25% above later stage pivot points. We will change our current positive view on the market should we begin to see technical deterioration in leading ideas coupled with additional distribution in the major averages.

US Focus Long

Posted on September 7, 2018September 7, 2018 by Raghavendra K

The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back off highs during the first week of September and continues to digest strong gains from August. Increasing distribution has caused the Nasdaq to break slightly below its 21-DMA, while the S&P500 is testing this moving average. The rising 50-DMA is the next level of support for both indices. The majority of growth ideas have pull back off highs and/or are consolidating above key support levels. Despite the rise in distribution, leadership remains intact. We maintain a bullish outlook as long as indices and leading stocks exhibit constructive price action and hold above key support levels.