We recently published a list of 7 Best Delivery Stocks To Invest In Now. In this article, we are going to take a look at where DoorDash Inc. (NASDAQ:DASH) stands against other best delivery stocks to invest in now.
An Overview of the Delivery and Courier Industry
The delivery and courier industry is diverse, encompassing a wide range of services that connect businesses and consumers through various shipping methods. Parcel delivery services are a major component, with companies offering both domestic and international shipping options, driven by the rise of e-commerce.
Another significant segment is food delivery platforms. These platforms connect hungry customers with local eateries, creating a new business model that thrives on convenience. Overall, the delivery industry is evolving rapidly, with diverse players working to meet the growing expectations for speed and reliability in shipping services.
According to Zion Market Research, the global on-demand delivery market was valued at $15.19 billion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 20.90% during 2024-2032 to reach $83.82 billion by the end of the forecast period. In 2023, the Asia-Pacific region led the market in revenue and is projected to maintain its dominance throughout the forecast period.
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This growth is fueled by increasing consumer expectations for fast and reliable delivery services, particularly same-day and next-day options. Experts highlight that the demand for quick deliveries has led to substantial investments in last-mile delivery solutions and advanced technologies, such as automation and artificial intelligence (AI).
In 2024, consumers have continued to prioritize free and fast shipping for their online orders, according to recent data from Digital Commerce 360 and Bizrate Insights. A survey of 1,013 online shoppers revealed that 81.34% consider free shipping their top priority when receiving deliveries. Fast shipping follows closely, with 68.41% of respondents highlighting its importance. Additionally, 55.68% of consumers emphasized the need for retailers to keep products in stock and ready to ship.
AI and automation are key trends that are significantly transforming the delivery services industry, making operations more efficient and responsive to consumer demands. For example, companies like DHL Express have introduced the DHLBot in Singapore and South Korea. The DHLBot is an AI-powered robotics arm that can sort over 1,000 small parcels per hour with 99% accuracy. This technology not only speeds up the sorting process but also reduces labor costs and minimizes errors, allowing for quicker deliveries.
As the industry evolves, it is clear that AI and automation will play a crucial role in shaping the future of delivery services.
Methodology
To compile our list of the 7 best delivery stocks to invest in now, we used the Finviz and Yahoo stock screeners to find the largest delivery companies. We also reviewed our own rankings and consulted various online resources. From an initial pool of more than 20 delivery stocks, we focused on the top 7 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 7 best delivery stocks to invest in now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A shot of a delivery driver zooming down a busy street, symbolizing the company’s quick and efficient delivery services.
DoorDash Inc. (NASDAQ:DASH)
Number of Hedge Fund Holders: 67
DoorDash Inc. (NASDAQ:DASH) is a technology company that primarily provides restaurant food delivery services. Operating in more than 30 countries across the globe, DoorDash connects consumers with thousands of restaurants, convenience stores, pet stores, grocery stores, and more. It is the largest food delivery platform in the US.
Additionally, the company offers a convenient service called Package Pickup, allowing customers to request a Dasher to collect their prepaid packages from home and deliver them to local carriers like UPS, FedEx, and USPS.
DoorDash Inc. (NASDAQ:DASH) is focused on expanding its marketplace and enhancing local commerce in the US by adding tens of thousands of new merchants across diverse categories like groceries, beauty products, alcohol, sporting goods, and home improvement. In Q2 2024, the company introduced features that improve personalization and streamline the ordering process, which helped drive a significant increase in monthly active users in the US.
Over the past 2 years, the company has expanded its international operations to 4 new countries and more than 500 new cities. DoorDash Inc. (NASDAQ:DASH) has successfully expanded internationally while maintaining strong consumer retention rates, indicating that its product experience resonates well with users.
In the second quarter of 2024, DoorDash Inc. (NASDAQ:DASH) achieved impressive financial results, setting new records for total orders, Marketplace Gross Order Value (GOV), and revenue. The company reported a 23% year-over-year increase in revenue, reaching $2.6 billion, while total orders rose by 19% to 635 million. Additionally, the Marketplace GOV increased by 20% to $19.7 billion. This marks the tenth consecutive quarter where revenue growth outpaced that of Marketplace GOV, showcasing the company’s continued strength in the competitive food delivery market and its effective strategies to expand beyond traditional offerings.
DASH ranks among the top 3 on our list of the best delivery stocks to invest in now. As of the second quarter of 2024, DoorDash Inc. (NASDAQ:DASH) was held by 67 hedge funds, according to Insider Monkey’s database. TimesSquare Capital Management stated the following regarding DoorDash Inc. (NASDAQ:DASH) in its “U.S. Mid Cap Growth Strategy” second-quarter investor letter:
“Our preferences in the Consumer-oriented sectors lean toward value-oriented or specialty retailers, franchise models, or premium brands. New to the strategy was the online food delivery platform and logistics provider DoorDash Inc. (NASDAQ:DASH) Since its IPO in 2021, the company’s scale has grown to entrench it with customers and consumers, though we have been cautious about its high valuation. Recently, the company reported lower-than-expected guidance for future margins and that caused its shares to sell off. In our view, DoorDash was appropriately investing for future growth and absorbing recent increased wage costs. Believing this short-term price dislocation made for an attractive entry price, we began buying, and DoorDash was up 2% through the end of the quarter.”
Overall, DASH ranks 3rd on our list of best delivery stocks to invest in now. While we acknowledge the potential of delivery companies, our conviction lies in the belief that 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 DASH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.