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In this article, we discuss 11 best delivery stocks to buy heading into 2023. If you want to see more stocks in this selection, check out 5 Best Delivery Stocks To Buy Heading Into 2023.
The global online food delivery market is forecasted to grow from $115.11 billion in 2021 to $128.32 billion in 2022, at a compound annual growth rate of 11.5%. Russia’s war on Ukraine hindered the global economic recovery from the COVID-19 pandemic in the near-term. The online food delivery market is now expected to reach $159.46 billion in 2026 at a CAGR of 5.6%. An increase in smartphone users and the mainstream trend of online shopping has given a rise to increasing online food delivery services worldwide.
Similarly, the global same day delivery market was valued at $4.84 billion in 2021. Business Wire, a Berkshire Hathaway media company, expects the market to be worth $14.46 billion by 2027, indicating a CAGR of 20.01% during 2021 to 2027. Food delivery trends in 2022 include third party deliveries, in-house restaurant delivery services, delivery data tracking, advanced technology penetrating the food and package delivery space, swift online grocery growth, and a boost in food delivery subscriptions.
Some of the best delivery stocks to buy for 2023 include Uber Technologies, Inc. (NYSE:UBER), Amazon.com, Inc. (NASDAQ:AMZN), and Walmart Inc. (NYSE:WMT).
Our Methodology
We selected the following delivery stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
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Best Delivery Stocks To Buy Heading Into 2023
11. Papa John's International, Inc. (NASDAQ:PZZA)
Number of Hedge Fund Holders: 22
Papa John's International, Inc. (NASDAQ:PZZA) was founded in 1984 and is based in Louisville, Kentucky. The company operates and franchises pizza delivery and dine-in restaurants under the Papa John's trademark in the United States and internationally. It operates through four segments – Domestic Company-Owned Restaurants, North America Commissaries, North America Franchising, and International Operations.
Credit Suisse analyst Lauren Silberman on November 4 maintained an Outperform rating on Papa John's International, Inc. (NASDAQ:PZZA) but trimmed the price target on the shares to $97 from $123. Papa John's International, Inc. (NASDAQ:PZZA) posted a disappointing Q3 print, though its long-term outlook remains resilient, the analyst told investors. Papa John's International, Inc. (NASDAQ:PZZA) remains one of the analyst's favorite names in restaurants, driven by a multi-faceted sales strategy, accelerating unit growth, and margin expansion.
According to Insider Monkey’s data, 22 hedge funds were bullish on Papa John's International, Inc. (NASDAQ:PZZA) at the end of Q3 2022, compared to 20 funds in the prior quarter. Jeffrey Smith’s Starboard Value LP is the leading position holder in the company, with 2.75 million shares worth $193 million.
Like Uber Technologies, Inc. (NYSE:UBER), Amazon.com, Inc. (NASDAQ:AMZN), and Walmart Inc. (NYSE:WMT), Papa John's International, Inc. (NASDAQ:PZZA) is one of the best delivery stocks for 2023.
Here is what Artisan Small Cap Fund has to say about Papa John's International, Inc. (NASDAQ:PZZA) in its Q3 2021 investor letter:
“Papa John’s is a global operator and franchisor of pizza delivery and carryout restaurants. The company is tracking nicely against our turnaround thesis which hinges upon an improvement in store-level economics leading to accelerating growth in restaurant development activity. Improved store-level economics is being driven in part by market share gains resulting from menu innovation. New menu items—parmesan crusted Papadias, Epic Stuffed Crust, Shaq-a-roni— coupled with enhancements to the digital/loyalty platform and supportive advertising are attracting new customers to the brand, increasing frequency of its existing customers and driving higher unit volumes and returns. As a result, the company is experiencing incremental interest from new and existing franchisees to develop new restaurants. Papa John’s opened a record 123 units in the first half of 2021 and now expects to open 220-260 new stores this year (vs. 140-180 previously)—most of which are outside of the US. Combined with ample white space globally, we believe a higher unit growth trajectory will drive an attractive and sustainable profit cycle.”
10. Lyft, Inc. (NASDAQ:LYFT)
Number of Hedge Fund Holders: 37
Lyft, Inc. (NASDAQ:LYFT) is a California-based company that operates a peer-to-peer marketplace for on-demand ridesharing in the United States and Canada. Lyft Delivery allows package and food delivery. The company also provides Ridesharing Marketplace, Express Drive, and Lyft Rentals.
Argus analyst Jim Kelleher on November 25 maintained a Buy rating on Lyft, Inc. (NASDAQ:LYFT) but lowered the price target on the shares to $17 from $41 to reflect the recent selloff in the stock. The company has disclosed its second round of layoffs this year and issued disappointing Q4 revenue guidance. However, the analyst expects its present challenges to be temporary and believes that Lyft, Inc. (NASDAQ:LYFT)’s long-term prospects remain resilient. He added that regardless of rising costs, Lyft, Inc. (NASDAQ:LYFT) reported meaningfully higher year-over-year earnings in Q3 2022, with growth in both active riders and revenue per active rider.
According to Insider Monkey’s Q3 data, 37 hedge funds were long Lyft, Inc. (NASDAQ:LYFT), compared to 35 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management held the largest position in the company, comprising 11.7 million shares worth $154.4 million.
Here is what Artisan Partners specifically said about Lyft, Inc. (NASDAQ:LYFT) in its Q2 2022 investor letter:
“Lyft, Inc. (NASDAQ:LYFT), the second-largest ride-hailing company in the US, connects riders and drivers over a mobile app. When we began our GardenSM campaign, our thesis was based on a likely strong ridership recovery post-pandemic, as well as management’s growing focus on increasing profitability after years of heavy investment. While the company has made some progress on margins as the economy has re-opened, driver shortages and fuel inflation have disrupted that progress. Given uncertainty around when these cost pressures could abate, we exited our position.”
9. DoorDash, Inc. (NYSE:DASH)
Number of Hedge Fund Holders: 41
DoorDash, Inc. (NYSE:DASH) is a California-based company operating a logistics platform that connects merchants, consumers, and dashers in the United States and internationally. The company offers DoorDash Drive, DoorDash Marketplace, and DoorDash Storefront to enable e-commerce and delivery services. DoorDash, Inc. (NYSE:DASH) is one of the leading delivery stocks to invest in.
On November 9, DoorDash, Inc. (NYSE:DASH) announced that it has signed a new partnership deal with beauty retailer Sephora to provide on-demand delivery from its stores across the U.S. and Canada. The partnership allows customers to shop and earn rewards on Sephora purchases made via the DoorDash app with delivery utilized in less than an hour.
Oppenheimer analyst Jason Helfstein upgraded DoorDash, Inc. (NYSE:DASH) on November 7 to Outperform from Perform with a 12-18 month price target of $70. The company's greater disclosure indicates improving U.S. restaurant margins, the analyst noted. He forecasts DoorDash, Inc. (NYSE:DASH)’s U.S. restaurant contribution margins rising from 5.7% in 2022 to 6.1% in 2025, with international and U.S. non-restaurant contribution margins improving from negative 13.4% to negative 2.4%. Additionally, competition is lower in the constrained fundraising backdrop, and DoorDash, Inc. (NYSE:DASH) can utilize its position to invest profitably and increase market share as competitors pull back, the analyst wrote in a research note.
According to Insider Monkey’s data, DoorDash, Inc. (NYSE:DASH) was part of 41 public stock portfolios at the end of September 2022, up from 31 in the prior quarter. Lei Zhang’s Hillhouse Capital Management is the largest stakeholder of the company, with 4.7 million shares worth about $232 million.
8. Domino's Pizza, Inc. (NYSE:DPZ)
Number of Hedge Fund Holders: 52
Domino's Pizza, Inc. (NYSE:DPZ) is a pizza company in the United States and internationally, operating through three segments – U.S. Stores, International Franchise, and Supply Chain. The company offers pizzas under the Domino's brand through company-owned and franchised stores. Domino's Pizza, Inc. (NYSE:DPZ) also delivers pizzas in all its locations.
On November 21, Domino's Pizza, Inc. (NYSE:DPZ) announced that it has signed an agreement with General Motors Company (NYSE:GM) to purchase hundreds of EVs. The new purchase is meant to attract new drivers for the pizza chain as the tight labor market limits the overall pizza delivery industry, in addition to achieving carbon emission reduction goals.
Domino's Pizza, Inc. (NYSE:DPZ) on October 13 declared a $1.10 per share quarterly dividend, in line with previous. The dividend is payable on December 30, to shareholders of record on December 15. Domino's Pizza, Inc. (NYSE:DPZ)’s dividend yield on November 28 came in at 1.15%.
Northcoast analyst Jim Sanderson upgraded Domino's Pizza, Inc. (NYSE:DPZ) on November 18 to Buy from Neutral with a $460 price target.
Among the hedge funds tracked by Insider Monkey, Domino's Pizza, Inc. (NYSE:DPZ) was part of 52 public stock portfolios at the end of September 2022, up from 32 in the prior quarter. Robert Pitts’ Steadfast Capital Management is a prominent stakeholder of the company, with 611,135 shares worth $189.5 million.
LRT Capital made the following comment about Domino’s Pizza, Inc. (NYSE:DPZ) in its October investor letter:
“Domino’s Pizza, Inc. (NYSE:DPZ) is the world’s largest franchisor of pizza restaurants with over 13,800 locations in 85 countries. As for any restaurant operator, the key metric to consider for Domino’s Pizza is same-store-sales (SSS) growth. Growing same-store-sales are ultimately how a restaurant business increases earnings from its existing assets. The company continues to impress in this criterion with SSS having grown in the U.S. for 40 consecutive quarters, and an astounding 109 straight quarters internationally.
Two-thirds of the company’s stores are currently abroad, and the international segment remains the company’s largest growth opportunity, as the penetration of convenient fast food remains lower abroad than in the United States. Pizza is a product with exceptionally high gross margins, one that “translates” well across different cultures, and one that literally “travels well”, not losing much of its appeal when delivered in a cardboard box. The rise of 3rd party delivery platforms such as Uber Eats, Doordash and Grubhub is challenging the pizza category as it has expanded the number of choices consumers have for convenient takeout. However, the economics of food delivery remain challenging for most restaurants and platforms alike25, while pizza delivery continues to be highly profitable. Regardless of how the “delivery wars” currently playing out end, Domino’s financial results show little impact of this increased competition, and the company continues to deliver exceptional financial performance…” (Click here to read the full text)
7. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 52
Target Corporation (NYSE:TGT) is one of the biggest American general merchandise retailers, providing food assortments, beauty products, and household essentials through its stores and digital channels. Target Corporation (NYSE:TGT) has an elaborate delivery network to cater to its clients. On September 22, the company declared a quarterly dividend of $1.08 per share, in line with previous. The dividend is payable on December 10, to shareholders of record on November 16. Target Corporation (NYSE:TGT) is a reliable dividend king.
On November 21, Evercore ISI analyst Greg Melich maintained an In Line rating on Target Corporation (NYSE:TGT) but trimmed the price target on the shares to $155 from $165. Target Corporation (NYSE:TGT) is "a share gaining multichannel retailer" and he is hopeful that the company's Q3 miss and guide-down "cleared the decks" and allowed for some higher confidence that inventories will be back in line by January, the analyst told investors.
Among the hedge funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management held the leading position in Target Corporation (NYSE:TGT) at the end of Q3 2022, with 4.8 million shares worth $711.3 million. Overall, 52 hedge funds were bullish on Target Corporation (NYSE:TGT) in the September quarter.
Here is what Carillon Tower Advisers specifically said about Target Corporation (NYSE:TGT) in its Q2 2022 investor letter:
“Target Corporation (NYSE:TGT) faced its worst day in decades after trimming its profit forecast for the year due to higher costs. While many of the cost pressures are likely to persist in the near term, the company also struggled with a shift in consumer spending, which resulted in inventory write-downs.”
6. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 55
United Parcel Service, Inc. (NYSE:UPS) is an American provider of letter and package delivery, transportation, logistics, and related services. It operates through two segments, U.S. Domestic Package and International Package. United Parcel Service, Inc. (NYSE:UPS) is one of the best delivery stocks to buy for 2023. On November 2, United Parcel Service, Inc. (NYSE:UPS) declared a $1.52 per share quarterly dividend, in line with previous. The dividend is payable on December 1, to shareholders of record on November 14.
On October 26, UBS analyst Thomas Wadewitz raised the price target on United Parcel Service, Inc. (NYSE:UPS) to $196 from $182 and maintained a Buy rating on the shares. The analyst cited the company's upside Q3 earnings and better than expected guidance for Q4, with a more feasible framework for International Package and Supply Chain margins than forecasted.
According to Insider Monkey’s data, 55 hedge funds were long United Parcel Service, Inc. (NYSE:UPS) at the end of September 2022, compared to 38 funds in the last quarter. Bill & Melinda Gates Foundation Trust is a prominent stakeholder of the company, with 740,689 shares worth nearly $120 million.
In addition to Uber Technologies, Inc. (NYSE:UBER), Amazon.com, Inc. (NASDAQ:AMZN), and Walmart Inc. (NYSE:WMT), United Parcel Service, Inc. (NYSE:UPS) is one of the favorite delivery stocks among smart investors.
Here is what ClearBridge Large Cap Growth ESG Strategy has to say about United Parcel Service, Inc. (NYSE:UPS) in its Q2 2022 investor letter:
“UPS has been a beneficiary of the pandemic-related shift to e-commerce. Revenues increased 15% in the year, with strong leverage in the business boosting operating profit by al- most 67%. Management is focusing on a ‘Better not Bigger’ strategy for the business and divested the UPS Freight business early in the year. Mean- while, the company is expected to increase distributions to shareholders in 2022, from both dividends and share buybacks.”
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Disclosure: None. 11 Best Delivery Stocks To Buy Heading Into 2023 is originally published on Insider Monkey.
