In this piece, we will take a look at the ten best delivery stocks to buy now. For more stocks, head on over to 5 Best Delivery Stocks To Buy Now.
The delivery industry is one of the most important sectors out there, but also one that is frequently misunderstood. While there are thousands of companies that make deliveries, not all of these can be accurately classified as a delivery services company. Therefore, before we get to the nitty gritty, it’s important to first understand what exactly is a delivery company. On this front, Law Insider points out that a delivery services company can be accurately defined as follows:
Delivery Services means the fulfillment of delivery requests, meaning the pickup from any location of any item or items and the delivery of the items using a passenger vehicle, bicycle, scooter, walking, public transportation, or other similar means of transportation, to a location selected by the customer located within 50 miles of the pickup location. A delivery request may include more than one, but not more than 12, distinct orders placed by different customers. Delivery services may include the selection, collection, or purchase of items by a DNC courier provided that those tasks are done in connection with a delivery that the DNC courier has agreed to deliver. Delivery services do not include deliveries that are subject to Section 26090, as that section read on October 29, 2019.
Of course, reading this definition would leave one wondering if firms like FedEx Corporation (NYSE:FDX) and United Parcel Service, Inc. (NYSE:UPS) are also delivery firms since they accept parcels from countries all over the world. However, both of these are also delivery companies too, since their shipments are made to fulfillment centers which then use passenger vehicles to make deliveries to the end customer.
Apart from couriers, the delivery industry has a variety of other components. Two of the most important of these are electronic commerce firms such as Amazon.com, Inc. (NASDAQ:AMZN) which operate their own delivery divisions and food delivery platforms such as DoorDash, Inc. (NYSE:DASH) which have made an entire business model of connecting restaurants with their hungry customers. Both of these markets are highly lucrative segments, with multiple research reports painting optimistic growth rates for their development.
Starting from the food delivery industry, a research report from Absolute Reports believes that the online food industry was worth $16.8 billion last year and the firm outlines that this industry will grow at a compounded annual growth rate (CAGR) of 11% until 2028 when it will be worth $31.5 billion. Another report, this time from Grand View Market Research, has vastly more optimistic evaluations for the global online food delivery market. This is evident from the fact that it valued this market at a whopping $189 billion in 2021 and adds that will grow through a CAGR of 10.8% until 2028 to sit at an estimated $388 billion by the end of the forecast period. Within this market, Grand View Market Research points out that Asia Pacific constituted the largest chunk of the market in 2021 as it commanded a 35% share. In terms of market segmentation through platforms, the research firm adds that the platform to consumer delivery, such as UberEats, held a 60% market share in 2021, with the direct restaurant to consumer delivery area believed to outpace the broader market slightly by growing at 11.2% between 2022 and 2028.
Just as the shopping industry evolves and technologies such as electronic commerce provide firms with new mediums of disruption, the electronic commerce segment itself has a variety of innovations that are highly sought out. One of these is last mile delivery, which refers to the end consumer’s premises such as a home or an apartment building, which is a key evaluation performance for the companies. This segment, namely the electronic commerce last mile delivery market, was worth $56.25 billion in 2021 according to a research report from Spherical Insights. The research firm adds that this segment will grow at an 8.13% CAGR until 2030 to sit at $136 billion by the end of the forecast period. For added reference, Spherical Insights adds that the global electronic commerce market itself will sit at a whopping $4.5 trillion soon, lending credence to the growth in demand for last mile services.
To take stock of the situation on the ground, let’s turn to a recent earnings call report from DoorDash, Inc. (NYSE:DASH). While the growth estimates that we have shared above are impressive on their own, the firm’s management shared even stronger estimates during its recent earnings call, as it outlined:
So just a couple of data points. Last quarter, we had said our U.S. convenience and grocery business, this was in Q3, had GOV growth of over 80%. That business grew 60% year-on-year in Q4, so it still continues to grow at meaningfully higher growth rates compared to the restaurants. Our third-party U.S. grocery business grew 100% year-on-year, both in Q3 and Q4. And in Wolt, as we alluded to in our shareholder letter, on a constant currency basis has grown 50% year-on-year, which is again significantly faster than its European peers.
Today, we’ll look at some of the top delivery companies in the market, with the top picks being Amazon.com, Inc. (NASDAQ:AMZN), Uber Technologies, Inc. (NYSE:UBER), and Shopify Inc. (NYSE:SHOP).
pio3 / Shutterstock.com
Our Methodology
To pick out the firms for this piece, we first gathered all the publicly traded firms that offer delivery services. Then, the number of hedge funds out of the 943 funds part of Insider Monkey’s database for the fourth quarter of last year that had invested in them was determined. The list was then ranked through this hedge fund sentiment, and the top ten delivery companies are listed below.
10 Best Delivery Stocks To Buy Now
10. Papa John’s International, Inc. (NASDAQ:PZZA)
Number of Hedge Fund Investors in Q4 2022: 23
Papa John’s International, Inc. (NASDAQ:PZZA) is an American pizza company that is headquartered in Louisville, Kentucky. The firm is the world’s third largest pizza delivery firm, with thousands of restaurants all over the world.
Insider Monkey dug through 943 hedge funds for their Q4 2022 investments and found out that 23 had held a stake in Papa John’s International, Inc. (NASDAQ:PZZA). Out of these, the firm’s largest hedge fund shareholder is Jeffery Smith’s Starboard Value LP which owns 2.7 million shares that are worth $227 million.
Along with Uber Technologies, Inc. (NYSE:UBER), Amazon.com, Inc. (NASDAQ:AMZN), and Shopify Inc. (NYSE:SHOP), Papa John’s International, Inc. (NASDAQ:PZZA) is one of the world’s top delivery companies.
9. Domino’s Pizza, Inc. (NYSE:DPZ)
Number of Hedge Fund Investors in Q4 2022: 44
Domino’s Pizza, Inc. (NYSE:DPZ) is one of the largest pizza chains in the world. The firm is headquartered in Ann Arbor, Michigan, the United States. Dominoes has more than ten thousand restaurants all over the world, and the firm leverages big data analytics to run its network by consolidating information from different platforms under a single system.
As of December 2022, 44 of the 943 hedge funds polled by Insider Monkey had held a stake in the company. Domino’s Pizza, Inc. (NYSE:DPZ)’s largest investor in our database is Brandon Haley’s Holocene Advisors which owns 727,829 shares that are worth $252 million.
8. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Investors in Q4 2022: 36
United Parcel Service, Inc. (NYSE:UPS) is an American package delivery company that is headquartered in Atlanta, Georgia. The firm ships packages within the U.S. and from international destinations as well as operates its own freight services through both the air and land routes.
As part of their fourth quarter of 2022 investments, 36 of the 943 hedge funds part of Insider Monkey’s research had held a stake in the company. United Parcel Service, Inc. (NYSE:UPS)’s largest hedge fund investor is Michael Larson’s Bill & Melinda Gates Foundation Trust which owns 740,689 shares that are worth $128 million.
United Parcel Service, Inc. (NYSE:UPS)’s large delivery network combined with an established presence makes it a top delivery company, and one that is also favored by hedge fund investors.
7. DoorDash, Inc. (NYSE:DASH)
Number of Hedge Fund Investors in Q4 2022: 41
DoorDash, Inc. (NYSE:DASH) operates an online platform that serves as a connecting medium for restaurants, drivers, and hungry people. It allows restaurants and hotels to sign up for its platform, accept orders from customers, and use the firm’s riders to make the deliveries.
Insider Monkey profiled 943 hedge fund portfolios for their December quarter of 2022 shareholdings and found out that 41 had invested in DoorDash, Inc. (NYSE:DASH). Out of these, Lei Zhang’s Hillhouse Capital Management is the company’s largest investor. It owns 4.5 million shares that are worth $219 million.
6. Lyft, Inc. (NASDAQ:LYFT)
Number of Hedge Fund Investors in Q4 2022: 45
Lyft, Inc. (NASDAQ:LYFT) is a software company that runs an online platform connecting riders with businesses and the everyday consumer. Not only does the firm’s platform enable people to book riders, but it also allows users to deliver food, grocery items, medicines and other goods to their homes. However, unlike Uber, Lyft does not have a pureplay food delivery platform like Uber Eats.
Insider Monkey’s Q4 2022 survey covering 943 hedge funds found that 43 had bought Lyft, Inc. (NASDAQ:LYFT)’s shares. The firm’s largest investor is Ken Fisher’s Fisher Asset Management which owns 10.9 million shares that are worth $121 million.
Amazon.com, Inc. (NASDAQ:AMZN), Lyft, Inc. (NASDAQ:LYFT), Uber Technologies, Inc. (NYSE:UBER), and Shopify Inc. (NYSE:SHOP) are some of the top delivery stocks favored by hedge funds.
Click to continue reading and see 5 Best Delivery Stocks To Buy Now.
Suggested Articles:
- 15 Most Promising Stocks to Buy According to Analysts
- 15 Best High Yield Dividend Stocks to Buy
- Mario Gabelli’s Performance and 13F Portfolio
Disclosure: None. 10 Best Delivery Stocks To Buy Now is originally published on Insider Monkey.
Hedge Fund Resource Center