Companies regularly announce all sorts of partnerships . Most are fairly humdrum affairs, and are hardly worth the ink spilled in a press release. But a big partnership that has the potential to create billions of dollars in value is rarer.
When that happens, it may be prudent to look at that partnership, and determine which company is the better buy now. Sometimes, it may even be both.
That could be the case with the deal inked between Domino’s (DPZ) and Uber (UBER).
By adding the pizza chain’s offerings to the Uber Eats menu, Domino’s remains in the mind of consumers looking to order in, without having to visit the pizza chain. It’s also why the company expects an extra $1 billion in sales.
Domino’s shares jumped 10 percent on the news Wednesday. But the real buy here may be in Uber, which has transformed from a ridesharing app into a delivery-on-demand service play.
Action to take: Uber’s revenues are on the rise, up 29 percent over the past year.
While not quite profitable yet, the company could be the leader in meal delivery. That makes it a valuable brand to own. Shares look like a reasonable buy at current prices, or on a dip.
For traders, shares are trending higher. The September $50 calls, last going for about $1.20, could see mid-double-digit returns in the coming months as the Domino’s partnership kicks off.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.