3 Top Food Delivery Stocks For Your July Watchlist
Food delivery stocks have understandably had a good year on the stock market so far. With the coronavirus pandemic either halting or limiting dine-in experiences, many find themselves turning to these services. If anything, the pandemic has transformed consumer behavior, restaurants are engaging with customers online and a lot of focus has been on the delivery business. As a result, top food delivery stocks have and continue to be in the spotlight right now.
No doubt, food delivery companies have seen a massive surge in their business over the past year, thanks to COVID-19 restrictions on restaurant dining. Many would even argue that this trend was already rising before COVID-19. If we are going to take a deeper dive into the numbers, the food delivery sector has been on a consistently upward trajectory over the past five years. It is also expected to grow as people opt for convenience in their everyday routines.
According to data compiled by Morgan Stanley (NYSE: MS) and McKinsey, food delivery apps in the US posted $26 billion in revenue in the past year, compared to $22 billion in 2019 and $10 billion in 2016. This clearly highlights the upward trajectory of their businesses. Even ride-hailing company Uber (NYSE: UBER) plans to expand UberEats, amid rising competition from its industry peers. With the increasing activity in food delivery apps, do you have these food delivery stocks on your portfolio in the stock market today?
Food Delivery Stocks To Buy [Or Sell] Now
- DiDi Global Inc. (NYSE: DIDI)
- DoorDash Inc. (NYSE: DASH)
- Domino’s Pizza Inc. (NYSE: DPZ)
DiDi Global Inc.
Didi Global, also known as the Uber of China, delivered one of the year’s biggest IPOs this week. The company sold 317 million shares, about 10% more than originally planned. For those unfamiliar, Didi is the largest ride-hailing player in China. Admittedly, it is better known for ride-hailing than food delivery. However, the company had also launched its delivery service last year, a move it hopes to provide its drivers with more income when the pandemic battered ride-hailing demand.
The Chinese ride-hailing company may have experienced a slowdown in results last year. But traffic has been rebounding quickly as China recovers from COVID-19. Many are optimistic about the potential the company has, and that has something to do with its entrenched position in China. The company had over 80% of the world’s second-largest economy shared-mobility market in 2020. With China’s shared-mobility market expected to grow 270% in the coming five years, DIDI stock investors could be looking at massive opportunities ahead.
As a high-growth company among Chinese tech companies, Didi plans to use these funds for growth capital. The company reportedly brought in $837 million in profit before certain payouts to shareholders on approximately $6.4 billion in revenue. The company also counts SoftBank, Uber, and Tencent as its key backers. While Didi has an impressive growth track record, the path to sustainable profitability is still in question. Not to mention that Chinese regulators are keeping a close eye on large Chinese tech companies. Considering all these, would you initiate a position in DIDI stock in the stock market today?
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DoorDash Inc.
DoorDash is an online food ordering and food delivery platform that is based in San Francisco. It is one of the largest food delivery companies in the U.S. whose platform serves over 450,000 merchants and 20 million customers. In essence, its platform enables local brick-and-mortar businesses to thrive in today’s economy by addressing consumers’ expectations for ease and immediacy. While early investors who bought DASH stock right out of its IPO may have reaped some gains, those who chased the rally were burned earlier this year as investors rotated from growth to value stocks.
According to Second Measure, DoorDash controlled 57% of the US food delivery market in May. But how fast is the company growing? From its first-quarter results reported in May, the company’s revenue came in 198% higher year-over-year to $1.1 billion, while total orders more than tripled. The company also recorded strong revenue in 2020 with its revenue surged 226% to $2.89 billion. Adding to that, it also generated an EBITDA of $189 million for the full year in 2020 compared to a loss of $475 million in 2019.
Of course, with the economy slowly reopening, the outlook for DoorDash may not be as bright as it was during the pandemic. The company might need to expand elsewhere to supplement the growth it has today. However, its ability to expand overseas is a question to answer. DoorDash also has plans to deliver more products, such as groceries and pet products. With all that in mind, will you consider DASH stock as a top food delivery stock to buy?
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Domino’s Pizza
Domino’s Pizza has been one of the best food delivery stocks to buy in the stock market. In fact, DPZ stock was a favorite among investors long before the pandemic struck. Like with most restaurants, the early days of the pandemic were tough on DPZ stock. However, it has bounced back significantly thanks to its digital ordering and delivery services. Admittedly, it is probably better known for its delivery than its restaurants. With menu and technological innovation, expanded value offerings, and more advertising spending, Domino’s stands a good chance to continue to enjoy high growth.
From the company’s first-quarter report, revenue came up 16.7% higher year-over-year amid positive domestic and international same-store sales growth. The pizza giant has clearly demonstrated that it can navigate the crisis well. More impressively, the recent news that it has launched robotic delivery services in the US to cut down the risk of transmission is also getting many investors very excited. The company also announced that it will host its Q2 earnings webcast on July 22.
Sure, DPZ stock has had a good run and its share price increased by more than 20% year-to-date. If you have been a long-term shareholder, you would be glad to know that since 2009, the shares have gone up about 150 times. That’s staggering to think of. DPZ stock has even put some of the biggest tech names to shame. While pizzas don’t always sound exciting, the company can certainly reward investors in the years ahead. The question is, can DPZ grow at the same pace as it did for the past decade?
