In this article, we discuss the 11 best delivery stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Delivery Stocks To Buy Now.
Delivery stocks have jumped into the spotlight as supply chain disruptions lead to inflation and businesses scramble to identify reliable players in the industry to handle the crisis. The pandemic has forced companies to turn towards automation in deliveries and the drone package delivery market is exploding. Companies are competing for faster delivery times and third-party applications that focus just on delivery have fetched valuations worth billions of dollars. The online food delivery market alone is expected to grow to $128 billion by 2027.
Some of the best delivery stocks to buy now include Amazon.com, Inc. (NASDAQ:AMZN), Uber Technologies, Inc. (NYSE:UBER), and Walmart Inc. (NYSE:WMT), among others discussed in detail below. Mergers and acquisitions in the industry are also on the rise as competition becomes fierce. Labor shortages have hit delivery stocks in recent weeks but these shortages are expected to decrease in 2022.
Our Methodology
The companies that operate in the delivery sector were selected for the list through a careful assessment of business fundamentals and analyst ratings to provide readers with some context for their investment choices.
Hedge fund sentiment was included as a classifier as well. The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
Photo by Brett Jordan on Unsplash
Best Delivery Stocks To Buy Now
11. Blue Apron Holdings, Inc. (NYSE:APRN)
Number of Hedge Fund Holders: 12
Blue Apron Holdings, Inc. (NYSE:APRN) delivers original recipes and fresh ingredients. The stock has soared amid interest from retail traders on Reddit in the last few months. Blue Apron Holdings, Inc. (NYSE:APRN) shares are up over 20% in the past year despite an earnings miss in the third quarter. Blue Apron Holdings, Inc. (NYSE:APRN) plans to increase marketing spend in the coming months as part of a strategy to drive customer growth.
Analysts expect slow progress on these growth initiatives since food and logistics costs are likely to be more pressing concerns for Blue Apron Holdings, Inc. (NYSE:APRN) in 2022. 12 hedge funds in the database of Insider Monkey were long Blue Apron Holdings, Inc. (NYSE:APRN) at the end of September with stakes worth $11 million.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Uber Technologies, Inc. (NYSE:UBER), and Walmart Inc. (NYSE:WMT), Blue Apron Holdings, Inc. (NYSE:APRN) is one of the stocks that hedge funds are buying.
10. Just Eat Takeaway.com N.V. (NASDAQ:GRUB)
Number of Hedge Fund Holders: 18
In late November, JPMorgan analyst Marcus Diebel upgraded Just Eat Takeaway.com N.V. (NASDAQ:GRUB) stock to Overweight from Neutral with a price target of GBP 8,632, identifying valuation as the primary reason behind the upgrade and backing food delivery stocks to have strong partner sign-ups in the coming months. The analyst underlined that the risk/reward associated with Just Eat Takeaway.com N.V. (NASDAQ:GRUB) had “materially turned”.
Deutsche Bank also recently issued a Catalyst Call Buy on Just Eat Takeaway.com N.V. (NASDAQ:GRUB) stock with analyst Silvia Cuneo saying that even in-line results for the fourth quarter would satisfy the market with regards to growth plans of Just Eat Takeaway.com N.V. (NASDAQ:GRUB) beyond the pandemic.
9. Papa John’s International, Inc. (NYSE:PZZA)
Number of Hedge Fund Holders: 33
Papa John’s International, Inc. (NYSE:PZZA) owns and runs pizza delivery restaurants across the world. The firm posted earnings for the third quarter in early November, beating market estimates on earnings per share and revenue by $0.12 and $11 million respectively. Papa John’s International, Inc. (NYSE:PZZA) also declared a quarterly dividend of $0.35 per share, in line with previous. Papa John’s International, Inc. (NYSE:PZZA) has a decent dividend history with eight consecutive years of payouts to shareholders.
Hedge funds also like Papa John’s International, Inc. (NYSE:PZZA) stock. 33 hedge funds in the database of Insider Monkey held stakes worth $744 million in Papa John’s International, Inc. (NYSE:PZZA) at the end of September.
In its Q3 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Papa John’s International, Inc. (NYSE:PZZA) was one of them. Here is what the fund said:
“Papa John’s is a global operator and franchisor of pizza delivery and carryout restaurants. The company is tracking nicely against our turnaround thesis which hinges upon an improvement in store-level economics leading to accelerating growth in restaurant development activity. Improved store-level economics is being driven in part by market share gains resulting from menu innovation. New menu items—parmesan crusted Papadias, Epic Stuffed Crust, Shaq-a-roni— coupled with enhancements to the digital/loyalty platform and supportive advertising are attracting new customers to the brand, increasing frequency of its existing customers and driving higher unit volumes and returns. As a result, the company is experiencing incremental interest from new and existing franchisees to develop new restaurants. Papa John’s opened a record 123 units in the first half of 2021 and now expects to open 220-260 new stores this year (vs. 140-180 previously)—most of which are outside of the US. Combined with ample white space globally, we believe a higher unit growth trajectory will drive an attractive and sustainable profit cycle.”
8. Domino’s Pizza, Inc. (NYSE:DPZ)
Number of Hedge Fund Holders: 36
Domino’s Pizza, Inc. (NYSE:DPZ) is one of the most reliable stocks in the delivery sector with eight years of consecutive and increasing dividend payouts. Argus analyst John Staszak recently raised the price target on Domino’s Pizza, Inc. (NYSE:DPZ) stock to $640 from $520 and kept a Buy rating, underlining that the firm was spending aggressively on ecommerce as online sales soared, accounting for nearly 70% of total revenue in the US.
Domino’s Pizza, Inc. (NYSE:DPZ) has profit margins that are higher than most peers, and as the pizza market grows, so will the profits for the company. International expansion is also an area where Domino’s Pizza, Inc. (NYSE:DPZ) holds a significant advantage compared to the competition as a new fiscal year begins.
In its Q3 2021 investor letter, LRT Capital Management, an asset management firm, highlighted a few stocks and Domino’s Pizza, Inc. (NYSE:DPZ) was one of them. Here is what the fund said:
“Domino’s Pizza is the world’s largest franchisor of pizza restaurants with over 13,800 locations in 85 countries. As for any restaurant operator, the key metric to consider for Domino’s Pizza is same-store-sales (SSS) growth. Growing same-store-sales are ultimately how a restaurant business increases earnings from its existing assets. The company continues to impress in this criterion with SSS having grown in the U.S. for 40 consecutive quarters, and an astounding 109 straight quarters internationally.
Two-thirds of the company’s stores are currently abroad, and the international segment remains the company’s largest growth opportunity, as the penetration of convenient fast food remains lower abroad than in the United States. Pizza is a product with exceptionally high gross margins, one that “translates” well across different cultures, and one that literally “travels well”, not losing much of its appeal when delivered in a cardboard box. The rise of 3rd party delivery platforms such as Uber Eats, Doordash and Grubhub is challenging the pizza category as it has expanded the number of choices consumers have for convenient takeout. However, the economics of food delivery remain challenging for most restaurants and platforms alike51, while pizza delivery continues to be highly profitable. Regardless of how the “delivery wars” currently playing out end, Domino’s financial results show little impact of this increased competition, and the company continues to deliver exceptional financial performance.
Domino’s Pizza stock is not optically cheap based on forward earnings, however, the company has routinely reported earnings growth of over 20% in almost all quarters since 2009. Given the company’s high growth rate, international growth opportunities, and capital light business model, which allows for returns on invested capital of over 40%, we are happy to continue to hold the shares.”
7. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 42
United Parcel Service, Inc. (NYSE:UPS) also has an impressive dividend history stretching back more than a decade. In early November, United Parcel Service, Inc. (NYSE:UPS) declared a quarterly dividend of $1.02 per share, in line with previous. The forward yield was 1.94%. The company hired over 60,000 seasonal workers ahead of the holiday season last year to keep up with the business demands as competitors complained of labor shortages and delays.
Top hedge funds have consistently backed United Parcel Service, Inc. (NYSE:UPS) over the years. New York-based Renaissance Technologies is a leading shareholder in United Parcel Service, Inc. (NYSE:UPS) with 854,700 shares worth more than $155 million.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and United Parcel Service, Inc. (NYSE:UPS) was one of them. Here is what the fund said:
“We funded the shift primarily with trims in UPS following big gains in this name. UPS is a long-term holding that have been and remain core holdings. During the quarter, however, we took gains and resized the positions to reflect their current risk-reward post strong increases in the stocks.
UPS too has been a core, long-term holding. For many years its stock languished alongside fundamental performance that was both uneven and often uninspiring. Since Carol Tomé took the reins last summer and capitalized on COVID-19-related freight disruptions, UPS’s earnings have soared, and the stock has followed suit. We trimmed the position toward the end of the quarter despite continued near-term momentum and an undemanding valuation multiple. This trim reflects the longerterm risk, though hard to quantify, that Amazon may become a full-fledged competitor and meaningfully disrupt the dynamics of the industry. While not our base case, this risk cannot be disproven. We continue to be very bullish on UPS’s near-term outlook and optimistic about its longer-term outlook, while also continually looking over our shoulder to make sure Amazon is not on our heels.”
6. DoorDash, Inc. (NYSE:DASH)
Number of Hedge Fund Holders: 42
UBS analyst Lloyd Walmsley has a Neutral rating on DoorDash, Inc. (NYSE:DASH) stock with a price target of $200. In a recent investor note, the analyst backed the firm to grow gross orders in the coming months but cautioned that the growth was already priced into the shares. DoorDash, Inc. (NYSE:DASH) has rapidly grabbed market share in the food delivery space from competitors since debuting on the market in late 2020. DoorDash, Inc. (NYSE:DASH) recently also announced that it had purchased Helsinki-based food-delivery startup Wolt in a deal worth more than $8 billion. Tony Xu, the CEO of DoorDash, Inc. (NYSE:DASH), said that the purchase was part of a vision of the firm to build a global platform for local businesses.
DoorDash, Inc. (NYSE:DASH) has also started offering 15-minute grocery deliveries in select areas of New York as it seeks to further improve the brand name as the “fastest” in the food delivery business.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Uber Technologies, Inc. (NYSE:UBER), and Walmart Inc. (NYSE:WMT), DoorDash, Inc. (NYSE:DASH) is one of the stocks that elite investors are keeping an eye on.
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Disclosure. None. 11 Best Delivery Stocks To Buy Now is originally published on Insider Monkey.
