GrubHub Is Surging as Food Delivery Heats Up

While off its highs, Twitter Inc.  (TWTR) is still up 20% on Thursday. But it's not the only one, with GrubHub (GRUB) up an impressive 29%.

Like Twitter, the company beat on earnings per share and revenue estimates, stunning investors and soaring to new 52-week highs. Unlike Twitter stock, though, GrubHub stock is holding onto most of its gains on the day.

Just as they did with Snap Inc.  (SNAP) and Twitter, GrubHub is going to be a "stock that people recognize as real because the company is real," TheStreet's Jim Cramer said on CNBC's "Mad Dash" segment.

Elaborating, Cramer reasoned that delivery has become a very real and powerful business, as the stay-at-home economy continues to thrive. Investors are recognizing that as GrubHub's business is flourishing.

The company reported earnings of 36 cents per share, coming in 6 cents per share above analysts' expectations. Revenue of $205.1 million came $3.3 million ahead of expectations and grew a whopping 49.2% year-over-year.

The short interest was near 20% on GrubHub, so these results are definitely catching more than a few bears offsides, Cramer pointed out.

GrubHub is now available in more than 1,300 cities and has grown its restaurant footprint from 40,000 to 80,000 over the past two years. "You have to have delivery or you will lose market share," Cramer said of the restaurants. For a long time, restaurants didn't want to do delivery, because they wanted customers to come and spend money.

The stay-at-home economy is showing that they'd rather stay at home, play video games from Take-Two Interactive Software (TTWO) or Activision Blizzard (ATVI) , and watch Netflix (NFLX) .

Finally, GrubHub's partnership with Yum! Brands (YUM) is huge for the company, said Cramer, who also manages the Action Alerts PLUS charitable trust portfolio.

That and Yum! purchases $200 million worth of GrubHub stock is a two-fold benefit. One, GrubHub has more liquidity to accelerate growth and two, it's a vote of confidence from Yum!

GrubHub impressively clung to most of its gains Thursday, despite the near-4% selloff in the S&P 500. Shares ended the day at $89.04, up 27.2%. 

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At the time of publication, Cramer's Action Alerts PLUS had a position in ATVI.