We recently compiled a list of the 10 Best Delivery Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Old Dominion Freight Line, Inc. (NASDAQ:ODFL) stands against the other delivery stocks.
The growth of global e-commerce is linked to a surge in demand for delivery services. According to research by environmental organization Stand.earth, global e-commerce is anticipated to grow at a rate more than twice that of in-store purchases. It is anticipated that by the end of this decade, 25,000 parcels will be shipped per second. The rise in global e-commerce has also produced a change in people’s shopping behaviors around the world. Online shopping accounts for about 15% of all American purchases, with an estimated yearly value of $1 trillion, as reported by Bloomberg.
ParcelHero projects that the global delivery and courier market will reach $648 billion by 2030, expanding at a compound annual growth rate (CAGR) of 4.31%, driven by improved logistics technologies and e-commerce. The market was valued at $482.9 billion in 2023, representing a 2.5% annual growth rate with a 5% growth from 2018 to 2023. The UK market is projected to reach $32 billion by 2030, with a compound annual growth rate (CAGR) of 6.22% from its 2023 valuation of $20.97 billion. The transportation management systems market is anticipated to surge by 19.7% from its 2023 valuation of $13.5 billion to $33.3 billion by 2028. Innovations in technology, such as tracking, automation, and AI-powered logistics, will boost productivity and accommodate growing package volumes.
Shipping and delivery times remain a key concern for customers. Recent data from Digital Commerce 360 and Bizrate Insights reveal that customers have remained committed to giving free and quick shipping top priority while placing online shopping in 2024. According to a survey of 1,013 online buyers, 81.34% of them rank free shipping as their main concern when receiving deliveries. Next in line is fast shipping, which was highlighted by 68.41% of respondents. Furthermore, 55.68% of customers stressed how important it is for merchants to maintain inventory and shipping readiness.
The demand for food delivery services has also increased dramatically as a result of the COVID-19 outbreak. Restaurants had to rely more on outside delivery services to stay afloat since dine-in options were shut down or severely restricted in many areas of the United States. Additionally, online grocery delivery and pickup services flourished as customers avoided going to stores. According to Bloomberg, online restaurant ordering accounted for about 40% of total restaurant sales in 2023, just over $22.4 billion in 2021, and has grown 300% faster than dine-in sales since 2014. CB Insights forecasts that the food delivery market size will grow to $320 billion by 2029.
In addition, drone technology is increasingly being used across the US, with leading companies providing faster delivery services, particularly for short-distance shipments. As per McKinsey, drone delivery services are expanding, with over 800,000 paid commercial deliveries globally by 2023. According to the firm’s most recent projections, the total addressable market in the United States alone is predicted to reach $5 billion by 2035, with an estimated 1.5 billion deliveries annually. Therefore, drone delivery is one of the first commercialized sectors of the larger future air mobility market, which also includes other platforms that use new aircraft, like urban and regional air mobility, as well as other commercial drone use cases, such as inspection or surveillance.
Even though drone deliveries are not yet widely available, 83% of consumers in six countries who participated in a McKinsey survey were aware of them. India leads at 92% and the U.S. comes in last at 53%, with 76% of respondents saying they would be willing to switch, reflecting a 19% growth from 2021. With 35% willing to pay up to 1.5 times more, 58% of respondents are willing to pay a premium. The most preferred use case is express shipping (56% are willing to switch), which is followed by food and medical delivery. Urban residents (80%) and frequent consumers (68% prepared to pay more for food delivery) have the highest adoption potential. Finally, operators should put speed and convenience first because 20% of customers currently pay for expedited shipment, showing that there is a high demand for faster alternatives.
A large fleet of freight trucks travelling down an interstate highway.
Our Methodology
For this article, we scanned Insider Monkey’s Q4 2024 proprietary database of billionaires’ stock holdings and identified delivery stocks from the list. These companies are involved in logistics, shipping, and last-mile delivery services. From there, we picked the top 10 stocks with the highest number of billionaires having a stake in them. Where two or more stocks were tied on billionaire sentiment, we used the dollar value of billionaire holdings as a tiebreaker between them.
Old Dominion Freight Line, Inc. (NASDAQ:ODFL)
Number of Billionaires: 11
Billionaire Holdings: 299,299,868
Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is one of the Best Delivery Stocks. It is now the second-largest US less-than-truckload carrier by revenue (after FedEx Freight) and the clear industry leader in terms of execution, freight selection, and service quality, all of which are important considerations for shippers when choosing a carrier. The company’s remarkable pricing discipline helped it stay afloat even during the Great Recession. It remained stable and maintained a constant core revenue per hundredweight when other carriers drastically reduced their rates.
In 2024, Mastio & Company selected the top LTL motor carrier for quality as the #1 National LTL Carrier for an unprecedented 15th year in a row. The comprehensive industry analysis of LTL carriers identified Old Dominion Freight Line, Inc. (NASDAQ:ODFL) as the top carrier for quality, according to logistics specialists polled on carrier performance for 15 years, dating back to 2010.
Expert in less-than-truckload, the firm’s fourth-quarter 2024 revenue dropped by 7.3% year over year due to reduced fuel surcharges and softer tonnage. Despite being the industry leader, profits declined once more, mostly as a result of decreased operating leverage.
Nonetheless, Conestoga Capital Advisors stated the following regarding Old Dominion Freight Line, Inc. (NASDAQ:ODFL) in its Q4 2024 investor letter:
“Based in Thomasville, NC, Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is one of the country’s largest less-than-truckload (LTL) carriers, an industry which has high barriers to entry. The company generated industry leading profit margins because of the durable competitive advantages it has created over decades including a balanced network and superior service. The freight industry is coming off a two plus year volume recession and we anticipate ODFL will resume its historical cadence of share gains in the next freight upcycle.”
For the fourth quarter of 2024, its net cash from operating activities was $401.1 million, and for the entire year, it was $1.7 billion. As of December 31, 2024, the company’s cash and cash equivalents were $108.7 million.
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Overall, ODFL ranks 9th on our list of the Best Delivery Stocks to Buy According to Billionaires. While we acknowledge the potential for ODFL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ODFL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.