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 Uber Technologies Inc. (NYSE:UBER) 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 close up view of a hand holding a smartphone, using a ride sharing app.
Uber Technologies Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 145
Uber Technologies Inc. (NYSE:UBER) is a global transportation company that ranks second on our list of the best delivery stocks to invest in now. It offers a variety of services, including ride-hailing, food delivery through Uber Eats, courier services, and freight transport. Uber Eats operates in more than 6,000 cities across 45 countries, connecting consumers with restaurants and grocery stores while matching them with independent delivery providers. Additionally, Uber facilitates connections between shippers and carriers in the freight industry, making it easier to transport goods efficiently.
The company is focusing on strategic growth through several key partnerships and initiatives aimed at expanding its delivery services. In the second quarter of 2024, Uber Technologies Inc. (NYSE:UBER) partnered with Instacart to enable US restaurant delivery within the Instacart app, allowing Instacart customers to order from a wide range of restaurants using an Uber Eats interface. Additionally, Uber expanded its collaboration with Costco, offering members additional savings and discounts on Uber One memberships. The company also announced various partnerships with popular grocery stores and retailers. These partnerships not only enhance Uber’s grocery and retail delivery options but also improve customer engagement by adding stores like The Vitamin Shoppe and GNC to its platform. Uber Technologies Inc. (NYSE:UBER) has also expanded its partnership with Rite Aid to include alcohol delivery at nearly 1,000 locations across eight US states.
In the second quarter of 2024, the company reported a delivery revenue of $3.3 billion, reflecting an 8% increase compared to the same quarter in the previous year. This growth was mainly driven by higher delivery gross bookings. Overall, Uber Technologies Inc. (NYSE:UBER) has managed to grow its revenue by 26% over the past 5 years.
On October 3, Uber Technologies Inc. (NYSE:UBER) announced a multi-year partnership with Avride to integrate delivery robots and autonomous vehicles into its Uber Eats and ride-hailing services. Avride is a US-based startup that develops and operates both autonomous cars and delivery robots. Once the service is launched, customers using Uber Eats or Uber apps may have the option to choose an Avride delivery robot or an autonomous vehicle for their deliveries or rides. The collaboration will begin in Austin with sidewalk delivery robots on Uber Eats, followed by expansions to Dallas and Jersey City.
These strategies position Uber Technologies Inc. (NYSE:UBER) as a strong player in the delivery market, making it an appealing stock option for investors looking to capitalize on the growing demand for delivery services. According to Insider Monkey’s database, 145 hedge funds held stakes in UBER in the second quarter of 2024.
Overall, UBER ranks 2nd 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 UBER 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.
