Why Yelp Is A Fantastic Choice For Growth Investors In 2018

On Jan 2, 2018, Yelp Inc. (NYSE:YELP) was upgraded to a Zacks Rank #1 (Strong Buy). The company is benefiting from the growing total addressable market (TAM), expanding mobile reach, high quality content and improving user engagement.

Moreover, partnership with GrubHub (NYSE:GRUB) and acquisitions of Nowait and Turnstyle present significant growth opportunity.

These factors are expected to drive Yelp’s earnings per share (EPS) growth trajectory. Currently, projected EPS growth rate of 391.03% is significantly better than the industry’s expectations.

Notably, Yelp beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters. The top line also surpassed the Zacks Consensus Estimate in three of the trailing four quarters.

GrubHub Partnership: Key Catalyst

Yelp’s partnership with GrubHub is a key growth driver. The collaboration will increase the number of delivery and takeout restaurants available for food ordering on the platform, which will help the company gain more users.

This will fuel advertising and transaction revenues for the platform. Moreover, management expects the partnership to improve Yelp's per-order profitability.

Further, the acquisition of Eat24 business by GrubHub provides the company a better return on investment.

Acquisitions Driving Growth

The acquisitions of Nowait (Februay 2017) and Turnstyle (April 2017) are expected to boost Yelp’s connection with business owners. We note that consumer-friendly services like reservations, waitlist and Wi-Fi marketing along with Yelp transaction platform, cash back, and Request a Quote will drive subscriptions from businesses in the long haul.

Notably, the company is expanding Yelp Reservations in Nowait, which accommodated more than 50 million diners at more than 9,000 local businesses in the last quarter.

A Solid Pick for Growth Focus Investors

Yelp sports a Growth Style Score of A.

Our research shows that stocks with Growth Style Scores of A or B when combined with a Zacks Rank #1 or #2 (Buy) offer the best investment opportunities in the growth investing space.

Other Stocks

Investors can also consider NVIDIA Corp (NASDAQ:NVDA) and Western Digital Corporation (NASDAQ:WDC) from the broader technology sector. The stocks sport a similar Zacks Rank as of Yelp. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for NVIDIA and Western Digital are currently pegged at 10.25%, and 25.06%, respectively.

Zacks Editor-in-Chief Goes "All In" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>