In this article, we discuss 10 best delivery stocks to invest in.
The food delivery market has changed in numerous ways over the past few years as overlapping economic forces affect a complex web of stakeholders in the business to create a growth story that investors cannot seem to get enough of. From being just a small sector that relied on pizza and Chinese food, global food delivery has become a market worth more than $150 billion, tripling in size since 2017. Most of this growth came during the COVID-19 pandemic, especially in the United States where the delivery market size more than doubled.
Some of the best delivery stocks to buy now according to hedge funds include Uber Technologies, Inc. (NYSE:UBER), Walmart Inc. (NYSE:WMT), and Amazon.com, Inc. (NASDAQ:AMZN). According to research by Restaurant Drive, online food delivery sales are estimated to grow as high as $220 billion by 2023, representing 40% of total restaurant sales. Top investment advisors are also bullish on the business, with Deutsche Bank estimating that the $24 billion online grocery market will surge to $120 billion by 2025.
However, the delivery sector remains a cost-intensive business that is low-margin and scale driven. According to consulting firm McKinsey, considerations such as brand, real estate, operating efficiency, breadth of offerings, and changing consumer habits will determine which stakeholders win or lose as the industry develops. Despite explosive growth during the virus crisis, which has all but subsided in the past few months, online delivery platforms, with few exceptions, remain unprofitable.
Our Methodology
The companies that operate in the delivery sector were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Brett Jordan on Unsplash
Best Delivery Stocks To Invest In
10. Just Eat Takeaway.com N.V. (OTC:JTKWY)
Number of Hedge Fund Holders: N/A
Just Eat Takeaway.com N.V. (OTC:JTKWY) operates an online food delivery marketplace. The firm features on the list of best delivery stocks to invest in. The firm posted earnings for the first half of the year on August 3, reporting losses per share of €16.34. The revenue over the period was €2.78 billion, up more than 57% compared to the revenue over the same period last year. The firm said that adjusted EBITDA improved by 29%, an improvement that demonstrated the path to profitability on an absolute level and as a percentage of GTV.
Just Eat Takeaway.com N.V. (OTC:JTKWY) was founded in 2000 and is based in the Netherlands, It serves customers in Canada, the United States, Austria, Belgium, Denmark, Germany, Luxembourg, Norway, Poland, Switzerland, Slovakia, and other countries.
Just like Uber Technologies, Inc. (NYSE:UBER), Walmart Inc. (NYSE:WMT), and Amazon.com, Inc. (NASDAQ:AMZN), Just Eat Takeaway.com N.V. (OTC:JTKWY) is one of the best delivery stocks to invest in.
9. Papa John’s International, Inc. (NASDAQ:PZZA)
Number of Hedge Fund Holders: 20
Papa John’s International, Inc. (NASDAQ:PZZA) operates and franchises pizza delivery and carryout restaurants under the Papa John’s trademark in the United States and internationally. The company is one of the most prominent delivery stocks to invest in. On September 22, Stephens analyst Joshua Long initiated coverage of Papa John’s International, Inc. (NASDAQ:PZZA) stock with an Overweight rating and a price target of $100, noting that the international store growth potential will remain a highlight in the story of the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Starboard Value LP is a leading shareholder in Papa John’s International, Inc. (NASDAQ:PZZA), with 2.8 million shares worth more than $230 million.
In its Q3 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Papa John’s International, Inc. (NASDAQ:PZZA) was one of them. Here is what the fund said:
“Papa John’s International, Inc. (NASDAQ:PZZA) 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. Restaurant Brands International Inc. (NYSE:QSR)
Number of Hedge Fund Holders: 20
Restaurant Brands International Inc. (NYSE:QSR) operates as a quick service restaurant company. The firm is among the best delivery stocks to invest in. Some of the famous brands it runs include Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs. The company has been building a dividend history in the past few years, increasing the payout consistently for the last six years. On May 3, the firm declared a quarterly dividend of $0.54 per share, in line with previous.
On September 9, Restaurant Brands International Inc. (NYSE:QSR) announced that it would be investing $400 million in the Burger King brand to accelerate growth in the US. Tom Curtis, the president of Burger King in the North American region, made the announcement.
At the end of the second quarter of 2022, 20 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Restaurant Brands International Inc. (NYSE:QSR), compared to 23 in the previous quarter worth $1.8 billion.
Here is what Pershing Square Holdings has to say about Restaurant Brands International Inc. (NYSE:QSR) in its Q2 2021 investor letter:
“QSR’s franchised business model is a high-quality, capital-light, growing annuity that generates high-margin brand royalty fees from three leading brands: Burger King, Tim Hortons and Popeyes. The company has nimbly navigated the COVID-19 pandemic and continues to make progress on returning its brands to sustainable long-term growth.
Since the onset of the COVID-19 pandemic, the company has bolstered its safety procedures and is accelerating its digital investments by expanding its delivery footprint, modernizing its drive-thru experience, increasing mobile ordering adoption, and improving its loyalty programs. As the global recovery continues to be uneven, these initiatives will allow the company and its franchisees to serve customers in a safe and reliable manner.
Each of the company’s brands are at various stages in recovery, with Burger King and Popeyes having returned to growth, while Tim Hortons is well on its way to recovering. On a two-year basis, same-store-sales grew 2.4% at Burger King and 24.4% at Popeyes during the last quarter. Meanwhile, Tim Hortons in Canada has improved to a mid-single digit decline in July, with each month during the second quarter showing sequential improvement. Tim Hortons’ slower recovery is largely driven by strict COVID-19 restrictions in Canada, which were only recently lifted in large provinces such as Ontario. In rural and suburban parts of Canada where restrictions were lifted earlier, Tim Hortons has already returned to growth. Given the habitual nature of Tim Hortons’ customer base, the recovery in sales will be tied to mobility and reopening.
The company expects to return to its historical mid-single-digit unit growth this year, and recently announced expansions for both Tim Hortons and Popeyes in large international markets. As underlying sales trends at each of its brands continue to improve, and as the impact from COVID-19 restrictions ease, we believe Restaurant Brands’ share price will more accurately reflect our view of its improving business fundamentals.”
7. DoorDash, Inc. (NYSE:DASH)
Number of Hedge Fund Holders: 31
DoorDash, Inc. (NYSE:DASH) operates a logistics platform that connects merchants, consumers, and dashers in the United States and internationally. The firm is among the best delivery stocks to invest in. On August 29, media reports indicated that the company had decided to end a grocery delivery partnership of more than four years with Walmart. The termination is expected to be effective in September.
On June 3, DA Davidson analyst Tom White maintained a Neutral rating on DoorDash, Inc. (NYSE:DASH) stock and lowered the price target to $82 from $135, noting that the updated target reflected “the broader multiple compression for technology growth stocks”.
Among the hedge funds being tracked by Insider Monkey, Beijing-based investment firm Hillhouse Capital Management is a leading shareholder in DoorDash, Inc. (NYSE:DASH), with 4.7 million shares worth more than $301 million.
6. Domino’s Pizza, Inc. (NYSE:DPZ)
Number of Hedge Fund Holders: 32
Domino’s Pizza, Inc. (NYSE:DPZ) operates as a pizza company in the United States and internationally. It is one of the top delivery stocks to invest in. The firm posted earnings for the second quarter of 2022 on July 21, reporting earnings per share of $2.82, missing market estimates by $0.08. The revenue over the period was $1 billion, up close to 4% compared to the revenue over the same period last year and beating analyst expectations by $20 million.
On September 23, Citi analyst Jon Tower maintained a Buy rating on Domino’s Pizza, Inc. (NYSE:DPZ) and lowered the price target to $415 to $475, noting that net job postings remain elevated for the firm versus history.
At the end of the second quarter of 2022, 32 hedge funds in the database of Insider Monkey held stakes worth $2.3 billion in Domino’s Pizza, Inc. (NYSE:DPZ), compared to 27 in the previous quarter worth $1.8 billion.
In addition to Uber Technologies, Inc. (NYSE:UBER), Walmart Inc. (NYSE:WMT), and Amazon.com, Inc. (NASDAQ:AMZN), Domino’s Pizza, Inc. (NYSE:DPZ) is one of the best delivery stocks to invest in.
In its Q2 2022 investor letter, Pershing Square Holdings, 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:
“Since our last update, Domino’s Pizza, Inc. (NYSE:DPZ)’s near-term business performance has shown meaningful improvement, including three-year stacked growth for the second quarter of 17% in the U.S., up 560 basis points sequentially. This improvement was driven by the full impact of its recent pricing actions, operational changes leading to improved staffing and labor utilization, and the return of its signature Boost Week promotion. These positive developments caused a significant recovery in Domino’s share price and its valuation increased to more than 28 times our estimate of next twelve months’ earnings. In light of the company’s relatively high valuation in the context of a volatile market environment, we decided to exit our investment to raise cash for alternative investment opportunities. We have enormous respect for Domino’s and its management team led by Russell Weiner, and we expect the company to continue its long track record of success.”
5. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 38
United Parcel Service, Inc. (NYSE:UPS) provides letter and package delivery, transportation, logistics, and related services. It is one of the elite delivery stocks to invest in. On September 7, the company announced that it would be hiring more than 100,000 extra workers to support the anticipated annual increase in package volume that will begin in October 2022 and continue through January 2023. The hiring plans come as online shopping slows after a pandemic-induced surge but remains well above pre-pandemic levels.
On September 22, Barclays analyst Brandon Oglenski maintained an Equal Weight rating on United Parcel Service, Inc. (NYSE:UPS) stock and lowered the price target to $180 from $200, noting that macro read-through and global data suggest a rough ride this winter for the firm.
At the end of the second quarter of 2022, 38 hedge funds in the database of Insider Monkey held stakes worth $613 million in United Parcel Service, Inc. (NYSE:UPS), compared to 50 in the previous quarter worth $159.5 million.
In its Q2 2022 investor letter, Mayar Capital, 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:
“United Parcel Service, Inc. (NYSE:UPS) has been a beneficiary of the pandemic-related shift to e-commerce. Revenues increased 15% in the year, with strong leverage in the business boosting operating profit by al- most 67%. Management is focusing on a ‘Better not Bigger’ strategy for the business and divested the UPS Freight business early in the year. Mean- while, the company is expected to increase distributions to shareholders in 2022, from both dividends and share buybacks.”
4. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 46
Target Corporation (NYSE:TGT) operates as a general merchandise retailer in the United States. It is one of the top delivery stocks to invest in. The company has an impressive dividend profile. It has consistently paid a dividend to shareholders for the past fifty-four years. On September 22, the firm declared a quarterly dividend of $1.08 per share, in line with previous. The forward yield was 2.72%.
On August 1, JPMorgan analyst Christopher Horvers maintained an Overweight rating on Target Corporation (NYSE:TGT) stock and raised the price target to $190 from $180, noting that the reactions to downward revisions in the retail sector were turning more positive.
At the end of the second quarter of 2022, 46 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Target Corporation (NYSE:TGT), compared to 50 in the preceding quarter worth $2.95 billion.
In its Q2 2022 investor letter, LRT Capital management, an asset management firm, highlighted a few stocks and Target Corporation (NYSE:TGT) was one of them. Here is what the fund said:
“The Target Corporation (NYSE:TGT) operates retail stores that sell a variety of merchandise ranging from necessities such as food and hygiene products to discretionary products like children’s toys and electronics. The sale of this merchandise is done primarily through physical retail locations in all 50 US states. However, Target also sells its merchandise digitally through its online website which delivers merchandise to its customers in three ways: order pickup, drive up, and “Shipt”. The Target Corporation operates a single segment through 1,926 physical stores.
Target is one of the largest US brick-and-mortar retailers and has successfully adapted to the competitive environment in the age of Amazon. As of 7/15/2022, TGT shares are down 36% for the year and down 44% since their all-time-high last year. The business is experiencing issues that are temporary in nature and we believe that the shares present an attractive opportunity at current prices. Target performed exceptionally well during the Covid-19 pandemic and its aftermath. Unfortunately, the company was recently caught flat footed, as consumer preferences shifted towards more spending on services (such as travel), at the expense of physical goods. As a result, the company found itself with an excess of inventory which will likely pressure margins in the next few quarters (…read more)
3. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Walmart Inc. (NYSE:WMT) engages in the operation of retail, wholesale, and other units worldwide. The firm is among the best delivery stocks to invest in. On September 20, the company announced that it had partnered with Firework to test livestream and immersive video experiences for retail. Under the deal, Walmart Connect will bring shoppable, short-form videos to digital properties while also making them available to advertisers.
On September 14, KeyBanc analyst Bradley Thomas initiated coverage of Walmart Inc. (NYSE:WMT) stock with an Overweight rating and a price target of $155, noting that the rating was underpinned by an outlook for defensive growth.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Walmart Inc. (NYSE:WMT), with 9.8 million shares worth more than $1.2 billion.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Walmart Inc. (NYSE:WMT) was one of them. Here is what the fund said:
“The pandemic has created challenges for businesses large and small; one major challenge for large essential retailers such as ClearBridge holdings Home Depot, Walmart Inc. (NYSE:WMT) and Costco has been ensuring adequate staffing to meet demand under trying conditions. All three instituted enhanced pay practices during the pandemic, with raises, unplanned bonuses and other benefits helping compensate employees for their efforts in a difficult environment. In September 2020 Walmart raised wages for 165,000 employees, including a number of entry positions to $15 an hour. It followed this in February with a raise for 425,000 workers that moved its average pay above $15 an hour.”
2. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 129
Uber Technologies, Inc.(NYSE:UBER) develops and operates proprietary technology applications worldwide. The company is one of the most prominent delivery stocks to invest in. On September 16, Uber Technologies, Inc.(NYSE:UBER) announced that there was no evidence the cybersecurity breach it endured touched on sensitive user data. It also said that all services of the firm, including Uber, Uber Eats, Uber Freight, and the Uber Driver app, were operational.
On August 23, Wolfe Research analyst Deepak Mathivanan maintained an Outperform rating on Uber Technologies, Inc.(NYSE:UBER) stock with a price target of $37, noting the firm remains a top idea in mobility.
At the end of the second quarter of 2022, 129 hedge funds in the database of Insider Monkey held stakes worth $5.3 billion in Uber Technologies, Inc.(NYSE:UBER), compared to 144 in the preceding quarter worth $8.5 billion.
In its Q2 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Uber Technologies, Inc. (NYSE:UBER) was one of them. Here is what the fund said:
“Uber Technologies, Inc. (NYSE:UBER) is a global technology platform that enables the transportation of people and products across cities and countries. The company’s three main business lines are 1) Mobility where the company is the number one or two player in the app-based personal transportation market in 10,000+ cities globally, 2) Delivery- (Uber Eats in the US) home delivery of prepared meals, grocery, liquor, and increasingly general retail products in seven of the top ten GDP markets globally, and 3) Freight- the largest global marketplace for end-to-end freight solutions including one million digitally connected truck drivers. In the company’s most recent quarter, it grew gross bookings 35% year over year, consummated transactions with 115 million unique customers, completed 1.7 billion trips a month, and all three divisions were adjusted EBITDA positive (…read more)
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Amazon.com, Inc. (NASDAQ:AMZN) engages in the retail sale of consumer products and subscriptions in North America and internationally. The firm features on the list of best delivery stocks to invest in. On September 21, the company announced that it would be expanding the renewable energy portfolio globally with an additional 2.7 gigawatts of clean energy capacity across 71 new renewable energy projects.
On August 29, Citi analyst Jason Bazinet maintained a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) stock with a price target of $152, noting that the firm would face regulatory risks with buying Electronic Arts.
At the end of the second quarter of 2022, 252 hedge funds in the database of Insider Monkey held stakes worth $30 billion in Amazon.com, Inc. (NASDAQ:AMZN), compared to 271 the preceding quarter worth $48 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
“Amazon.com, Inc.(NASDAQ:AMZN) is the world’s largest retailer and cloud services provider. Shares of Amazon declined 35% in the quarter due to weaker-than-expected profits resulting from an overcapacity of resources coming out of COVID. We expect Amazon to grow into its retail capacity in the quarters to come, which would enable it to improve profitability accordingly. Amazon remains one of our largest holdings due to its durable competitive advantages with a leading position in multiple trillion-dollar markets with a long runway for growth (…read more)
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Disclosure. None. 10 Best Delivery Stocks to Invest In is originally published on Insider Monkey.
