Below you can find the list of the top 5 food delivery stocks for 2021. For our detailed discussion of the food delivery industry and its growth catalysts, go to Top 10 Food Delivery Stocks For 2021.
5. Domino’s Pizza, Inc. (NYSE: DPZ)
Domino’s Pizza, Inc. (NYSE: DPZ) is a Michigan-based pizza franchise that was founded in 1965 by Tom Monaghan and James Monaghan. Pizzas are the primary focus of the company, but it sells other foods like pastas, sandwiches, beverages and desserts as well. The franchise has operations in 83 countries and more than 5,000 cities. It has more than 15,000 stories, predominantly in the US, the United Kingdom and India. The company offers a 30-minute guarantee on pizza delivery in India, China, Mexico, Vietnam and Columbia.
Domino’s Pizza has a market cap of close to $14.5 billion and posted $4.14 billion in revenue in January 2021. The company kept the menu simple for the first three decades of its founding, only offering two pizza sizes and one soft drink option to keep delivery smooth. However, as competition from other fast food brands heightened, it expanded, investing millions of dollars into new pizza products, like deep pan pizzas that were then adopted by other brands. The extra-large pizzas were also a first in the industry, with Domino’s leading this charge.
Citi, a leading global financial services firm, last month started coverage on Domino’s stock with a Buy rating. It identified several growth factors as the reason behind the decision, even as the food delivery benefits of the pandemic fade across the market. Baird, another investment banking firm, last month said it had advised investors to keep faith in stocks that could continue the operations momentum gained in 2020 through to 2022, identifying Domino’s Pizza as one of the stock options that had the potential to deliver on this promise.
4. Walmart Inc. (NYSE: WMT)
Walmart Inc. (NYSE: WMT) is an Arkansas-based multinational retail firm that was founded by Sam Walton in 1962. It is the largest company in the world by revenue and operates more than 11,000 stories in 26 countries. It is also the largest private employer globally with over 2 million employees. The overseas investments for t
he company have seen mixed returns, with franchises under different names going on to success in Canada, United Kingdom and China but failing in Germany and South Korea.
The company has a market cap of over $382 billion and posted a revenue of $559 billion in January 2020. The shares of the company have seen a boost over the past few weeks as it was reported that its subsidiary in India by the name of Flipkart was considering going public. Flipkart has been valued at over $24 billion after it raised over $1 billion in the latest round of funding at the end of last year. In January this year, Walmart partnered with smart box maker Home Valet with plans to expand its food delivery business.
The shares of the company have seen a more than 13% increase over the past few months and as the economic restrictions around the US are lifted, their price is likely to touch new highs. In a detailed assessment of the retail market, the Bank of America last month said that Walmart was closing the gap on Amazon in the retail business. During the pandemic, online delivery service had catapulted Amazon ahead of Walmart as people ordered from the comfort of their homes. The bank said Walmart still maintained the lead on Amazon in grocery delivery.
3. Deliveroo Holdings Plc (LSE: ROO.L)
Deliveroo Holdings Plc (LSE: ROO.L) is a London-based online food delivery service founded by Will Shu in 2013. It operates in over 200 locations across thirteen countries, including most of Western Europe. The company went public late last month where the company forecast a valuation of more than $12 billion but instead witnessed a very low-key IPO and shares tumbled more than 31% afterwards. The company makes money by charging restaurants and customers fees for food delivery charges.
The company is backed by Amazon, the largest e-commerce trader in the world. Even though the company is as yet unprofitable, the shares of the firm are rising as retailers start to trade. As Amazon plans to expand in the food service industry, the firm can expect healthy investments to turn fortunes around. The pandemic-driven surge for the delivery business has helped Deliveroo stay afloat, but it needs more to compete with bigger firms like UberEats, Grubhub and DoorDash that dominate the market across the world.
Big banking names like JP Morgan, Goldman Sachs, Bank of America and Citigroup worked on the IPO of Deliveroo that fell way short of expectations. Even though shares prices were lowered, interest remained minimal. However, the founder of the firm, Will Shu, is undeterred, and says the company’s fee per delivery is rising on a year-on-year basis, and that his previous experience of proving doubters wrong will spur him to take the firm to greater heights.
2. Blue Apron Holdings, Inc. (NYSE: APRN)
Blue Apron Holdings, Inc. (NYSE: APRN) is a New York based meal kit delivery service founded by Matt Salzberg, Ilia Papas and Matt Wadiak. It operates exclusively in the US and delivers ingredients and recipes for food to customers so that they can make meals at home. The company went public in 2017. The products offered by the company include Blue Apron meals, Blue Apron Wine, and Blue Apron Market. The company works with farms to promote soil health and is under pressure to decrease waste materials on packaging.
The firm has a market cap of over $115 million and reported more than $460 million in revenue in December 2020. Blue Apron said that the net revenue for the fourth quarter of 2020 increased 22% year-on-year to more than $115 million driven by the growth strategy of the company that focuses on innovation. The average order value of the company has also grown 6% year-on-year to $61, the firm disclosed. Orders per a single customer have increased 15% to 5.3 and average revenue per person is up 22% year-on-year.
In the outlook report provided for the first quarter of 2021, the company has projected that the year-on-year revenue would increase to up to $149 million, an increase of up to 27%. Stocks for stay-at-home companies have soared since the pandemic, with freelancing, food delivery, and other technology platforms posting record high prices. Even as the pandemic recedes, the unique place that Blue Apron provides in the market is unlikely to change and so it is one of the best delivery stocks for investors for this year.
1. Hello Fresh SE (XETRA: HFG.DE)
Hello Fresh SE (XETRA: HFG.DE) is a Berlin-based meal kit delivery company founded by Dominik Richter in December 2011. It is the largest meal kit provider in the US, beating competitor Blue Apron, and also operates in other countries like the United Kingdom, Germany, Belgium, France and Canada. It went public in November 2017. The business model of the firm revolves around delivering the ingredients for a meal to customers who can then get the food ready through a recipe provided by HelloFresh in under an hour.
The company has a market cap of over $13 billion and posted a revenue of over $4.5 billion in December 2020. The company has a gross profit margin of 65% and a net income margin of 9.84%. It also has a 81% return on equity and a 25% return on assets. Despite the strong numbers, American investment firm JP Morgan late last year downgraded the firm from Underweight to Neutral as economies around the world reopened in the wake of the vaccine rollout. The shares of the firm have increased more than 180% compared to 2019.
Bryan Garnier, a European growth investment bank, late last year said that the meal-kit company was expected to post strong growth going ahead. The firm said HelloFresh was one of the models of success in the meal-kit delivery business and expected the firm to continue to grow at double digit rates.
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