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Food Delivery Stocks to Keep an Eye On

During the before times, people sometimes forgot to wash their hands, zoom was a sound made by car commercials, and food delivery companies had a lot of financial ups and downs. Companies like DoorDash, Uber Eats, Grubhub and Postmates fiercely competed for national supremacy. To top it off, customers were finicky, some could be swayed by coupons and promotions, but a majority of them seldomly remained loyal to a single food delivery service.

In 2020, as the world evolved due to COVID-19 restrictions, food delivery apps thrived. Restaurants pivoted quickly to rearrange their businesses and shifted their focus from indoor dining to takeout. Restaurant workers, who were furloughed or laid off and waited for government relief, signed up as drivers. Diners, some bored at home with little to do, ordered takeout so they’d have something to look forward to.

As a result, food delivery has and continues to grow as people opt for convenience in their everyday routines. Due to this transformation in consumer behavior, food delivery stocks have thrived. According to data compiled by Morgan Stanley (NYSE: MS) and McKinsey, US-based food delivery apps earned $26 billion in revenue this past year, compared to $22 billion in 2019.

Food Delivery Stocks to Watch

DoorDash Inc. (NYSE: DASH)

DoorDash, which is based in San Francisco, is one of the largest food delivery platforms in the United States. Even though DoorDash’s stocks have had some ups and downs since they went public in December 2020, positive sentiment for DoorDash’s stock has increased after they announced their Q1 results in early May. According to Second Measure, DoorDash controlled 57% of the US food delivery market in May. As reported in DoorDash’s first-quarter results, their revenue came in 198% higher year-over-year to $1.1 billion, while total orders more than tripled. In 2020, the company also did well, as its revenue surged 226% to $2.89 billion. To top it off, DoorDash also generated an EBITDA (aka earnings before interest, taxes, depreciation, and amortization) of $189 million for 2020 compared to a loss of $475 million in 2019.

As a result, analysts have upped their price estimates for DoorDash stock, as the company focuses on expanding into new geographies and beyond its core food delivery vertical with announcements of new partnerships for groceries and other items.

DiDi Global Inc. (NYSE: DIDI)

Didi Global (aka the Uber of China) delivered one of the year’s largest IPOs in June 2021, the biggest stock sale by a Chinese company since the 2014 listing of e-commerce giant Alibaba Group Holding Ltd to be exact. The company sold 317 million shares, about 10% more than originally planned. While Didi is better known for ride-hailing than food delivery, they launched their food delivery service in 2020 in an effort to help their drivers supplement their income since the pandemic battered ride-hailing needs.s

Even though Didi may have experienced a slowdown in 2020 results, traffic has been rebounding quickly as China recovers from the pandemic. According to NASDAQ, the company owned more than 80% of the world’s second biggest economy shared-mobility market in 2020. Since China’s shared-mobility market is expected to grow 270% in the next few years, Didi’s stock investors could be looking at massive opportunities ahead.

Domino’s Pizza Inc. (NYSE: DPZ)

It may come as a surprise, but Domino’s Pizza has consistently been one of the best food delivery stocks to invest in. As it was for a majority of businesses, the early days of COVID-19 were tough on Domino’s stock. Due to Domino’s menu, technological innovation, expanded value offerings, and increased ad spending have bounced back significantly.

From the company’s Q2 report, the company earned $116.6 million ($3.06 per share) up from $2.99 a share in the second quarter of 2020. Overall, their revenue rose 12.2% year over year to $1.03 billion. Additionally, Domino’s 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.

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