Economists tell us that luxury goods are subject to high demand elasticity and thus, in a financial crisis, are impacted hard. As a luxury car maker, Aston Martin fell victim to this, with revenue dropping from £650 million in 2019 to £270 million in 2020. Retail sales dropped from 4,482 units in 2019 to 2,752 a year later, too.

With far less money coming in, Aston Martin raised a total of $1.1bn at a high interest rate of 10.5% in 2020. It’s a gutsy move but a rather unnerving one from a shareholder’s perspective. The additional funds might sprout new opportunities and R&D investments for the firm but could just be used for filling in holes. Coupled with issuing £250m more shares last year for more cash, Aston Martin may have patched up its 2020 dent but would need to outperform to make the debt interest worthwhile.

What’s more worrying to me about the luxury car group is that its pre-pandemic performance was hardly impressive. Just glancing at its share price chart from its 2018 IPO, one will notice a consistent downward trend. 

Aston Martin’s poor performance has largely been attributed to its poor management and the increasing pressure on the car market to shift to environmentally friendly vehicles. The EU has mandated that from 2021, the EU fleet-wide average emission target for new cars will be 95 g CO2/km. The penalty is €95 for each g/km of target exceedance. Aston Martin’s current fleet averages just over 200g CO2. Considering the appeal for Aston Martin surrounds its high performance and robust petrol engines, I believe the luxury car marker has an uphill battle ahead of it.

However, it’s not all bleak for Aston Martin. Canadian Billionaire Lawrence Stroll bought a 16.7% stake in the business and became the CEO of the company. Whilst Stroll’s performance with Aston Martin has yet to be measured, his track record and success with Racing Point Force India, Tommy, Michael Kors, Pierre Cardin and Ralph Lauren is promising.

Furthermore, in late 2020, Mercedes-Benz increased its stake in Aston Martin to 20%. Mercedes’ impressive hybrid and electric engine systems will be fully available to Aston Martin by 2022.

Aston Martin itself is aiming for 20-30% of its fleet to be hybrid by 2024. Additionally, Aston Martin has proven that its engineering can adapt efficiently to greener solutions. Its 612bhp electric super-saloon Rapide E is already outperforming its 552bhp V12 counterpart.

In conclusion, Aston Martin has had a turbulent year and an even more shaky past. However, armed with a new CEO and engineering prowess, Aston Martin’s shares might shift up a gear too.

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Cohan Chew has no position in any stocks 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.

Every time Boris Johnson announces new lockdown restrictions, British businesses become increasingly despondent. But not Just Eat Takeaway (LSE: JET). As a result of Boris’s recent lockdown measures, the food delivery service saw its orders jump 58% in the UK. Over the whole of 2020, revenues increased over 50% and its shares outperformed the FTSE 100. However, considering the same company reported gargantuan losses in the years leading up to the pandemic, can Just Eat stock maintain its recent performance once the pandemic is over?

Whilst those in the UK are only exposed to Just Eat’s British network, it’s worth noting the expansive scale of the Danish company. Just Eat currently operates in 28 countries, often under a different moniker; the company trades as Menulog in Australia, 10bis in Israel and SkipTheDishes in Canada. Just Eat is much more than a European delivery service.

Since its IPO in late 2016, Just Eat’s share price has increased steadily – climbing around 350% to its peak in mid 2020.  This in itself suggests that investors are increasing their confidence in Just Eat.

Perhaps what’s most exciting about Just Eat is its aggressive competitive strategy. In the UK, Just Eat has a marginally majority market share in its field: 37% compared to Deliveroo’s 36% and Uber Eats’ 26%. Just Eat has thus been feeling the pressure from its competitors, and is responding aggressively.

In January 2021, Just Eat Chief Executive Jitse Groen said the company plans to “go all out” in London, effectively pledging war on Deliveroo and Uber Eats. “We do whatever we can to make life very, very, very complicated for the competitors,” Groen said. “It’s either all or it is nothing and we are going to go for all in the UK.”

These words should not be disregarded as an empty threat, either. In 2019, Just Eat out-hustled Uber to buy Chicago-based delivery service Grubhub. Uber offered $6.5 billion but Just Eat raised its offer to $7.3 billion. “Matt and I are the two remaining food delivery veterans in the sector,” Groen said of Grubhub CEO Matt Maloney.

Sadly, the costly merger resulted in Just Eat’s losses surging from £27 million to £158 million within one year, causing its share price to plunge. This is where I have reservations about the company – whilst revenue has been increasing, Just Eat’s losses are too.

Looking ahead, Just Eat’s UK growth might struggle to match 2020’s if the pandemic comes to an end. However, the company also experienced solid growth in countries where lockdown restrictions weren’t as long or as burdensome as that of the UK’s. Menulog saw 166% growth in orders over the year and the ‘rest of the world’ grew 47%.

Over the past week, Just Eat’s stock price has been tumbling, positioning itself further from its October 2020 highs and even under its pre-pandemic price. Considering it for my own portfolio, I’d expect upside potential in Just Eat’s stock price as 2021 plays out. Looking further ahead, I have faith that Groen’s aggressive strategy will pay off. However, whilst losses from Grubhub should also be recovered as time goes on, Just Eat’s prior losses are too troubling for me.

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Cohan Chew has no positions in any stocks mentioned. The Motley Fool UK has recommended Just Eat Takeaway.com N.V. 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.

All-time high to all-time dough

2020 effectively wiped out its 2019 efforts, resetting investors’ gains over the period. Plummeting from February 2020 highs of 2442p to 1119p lows in September 2020, Greggs’ stock price saw its biggest decline in its history.

Prior to the coronavirus, Greggs was enjoying year-on-year growth in sales (13.5% between 2018 and 2019) and profit (27.2% between 2018 and 2019). In its most recent quarter, the company showed a 31% decline in sales from last year.

Echoing the UK government’s inconsistent policies of stay-at-home orders and eat-out-to-help-out orders, Greggs’ stock price also behaved temperamentally and struggled to gain traction. 820 staff were cut from Gregg’s workforce throughout the period, and multiple Greggs factories were shut-down due to Covid-19 outbreaks.

Boom or crust

Along with the rest of the London Stock Exchange, good news for Greggs came in the form of Pfizer’s vaccine announcement. Immediately after the announcement, the bakery’s stock price jumped 25% – its biggest daily increase of 2020. Since the November announcement, Greggs’ stock price has continued to rally to 1907p; much closer to its all-time highs than its 2020 lows.

By looking at Greggs’ shares, you couldn’t tell that Boris Johnson locked down London in December and the rest of the UK shortly after. Unlike last year, there appears to be no correlation between social restrictions and Greggs’ stock price.

This is, in part, due to positive news coming out of Greggs HQ. In its most recent earnings report, Greggs revealed it operating at 85% of its sales equivalent 2019 level. This was taken as good news for shareholders and its stock price rose 10%. Greggs also boasted about its partnership with Just Eat and reported that its digital sales doubled.

Greggs currently has 600 stores in operation and is planning to increase that total to 800 by 2021.

However, it’s worth bearing in mind that the UK was largely in a tier system throughout the reported quarter, not full lockdown. One would thus presume that the current quarter will be worse for the company.

Furthermore, operating at 85% of its sales could be regarded as revenues falling 15%. Whilst online sales doubled, the figures only accounted for 5.6% of sales. Additionally, losses are expected to hit £15m.

Rolling ahead

Greggs’ stock price trajectory assumes that the UK will return to normality soon. Sadly, as chief medical officer Chris Whitty has stated, the country is a “long way” from life returning to normality. Greggs’ stock price is therefore too high to excite investors right now, in my opinion.

As cases in the UK continue to rise at an alarming level, a decline in Greggs’ shares should be expected. However, when the vaccine fully rolls out and Greggs can once again widely offer its famous sausage rolls again, I believe we investors can restore their utmost confidence in the company. 

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Cohan Chew has no positions in any stocks mentioned. The Motley Fool UK has recommended Just Eat Takeaway.com N.V. 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.