Many food delivery stocks shined brightly for investors through 2023, especially for the bravest dip-buyers who gave them the benefit of the doubt in the back half of 2022. While the easiest gains seem to have already been made in the corner of food delivery, that doesn’t mean there isn’t any upside going into 2024, a year that could see rates begin to fall.
Retreating rates aren’t the only reason to pursue the barely profitable delivery plays, though. Going into 2024, I expect the rise of artificial intelligence (AI) will continue at full speed. When it comes to food delivery companies, I believe the ones that fully harness the power of their data and AI-driven models will be the ones to prosper most.
Even in a wildly competitive market, the most tech-savvy industry combatants may be able to fend off hungry rivals, using AI to gain market share, improve customer satisfaction, and push margins higher. In this piece, we’ll check out three food delivery stocks that some big-name analysts on Wall Street view as more than able to deliver impressive gains.
Top Food Delivery Stocks: DoorDash (DASH)
DoorDash (NASDAQ:DASH) stock crushed it in 2023, delivering a whopping 102.6% in gains. In 2024, the stakes are higher, and the odds of another double are next to nil, in my opinion. Still, plenty of big-name analysts believe there’s more to look forward to in 2024.
Analyst Lee Horowitz of Deutsche Bank has a $125 price target on the stock, which implies the stock could appreciate 26% from where it’s starting the year.
One of the most intriguing pieces of Horowitz’s bullish note is his observation that the firm still has a vast total addressable market (TAM) it can capture.
Remember, food delivery companies don’t just deliver from your favorite restaurants. They can bring groceries from the local supermarket to your door, as well as various other discretionary goods from other retailers. Indeed, the next frontier for DoorDash’s growth could lie outside of restaurants. Furthermore, that makes me optimistic that the firm can keep its foot on the pedal regarding top-line growth.
Going into 2024, I’d look for DoorDash to continue embracing AI innovation, with “best-in-class agents” to help remove friction in the food delivery process.
Uber (NYSE:UBER) is a ride-hailing giant that’s also captured a respectable slice of the food-delivery market. For 2023, Uber stock surged around 148%, topping the performance of rival DoorDash. In 2024, some analysts have their sights set on new all-time highs. That said, not all Wall Street pros are upbeat. Some think Uber stock could risk giving up some of last year’s gains as shares look to consolidate after a period of red-hot momentum.
I’m in the camp that thinks Uber is in need of a cool-off. That said, I acknowledge the firm has a competent management team to add to last year’s strengths, especially on the front of AI. After all, it’s hard to imagine a food delivery firm with as much of a data advantage as Uber, a transportation top dog that recently earned its spot in the S&P 500.
Though I view food delivery as a bright spot for the new year, investors should check out Nomura’s latest downgrade of the stock (to neutral from overweight). Nomura isn’t exactly a raging bull on ride-hailing, especially if consumers pull the brakes on travel, perhaps in response to a mild recession.
In any case, I view Uber stock as worthy of a spot on a watchlist for now.
Instacart (NASDAQ:CART), also known as Maplebear, is a relative newcomer to the public markets. And though shares were off to a sluggish start in 2023, with the stock down around 22% from its peak surrounding its September 2023 debut, you don’t have to look far to find an analyst who views the recent dip as a buying opportunity. After some tough sledding through the holidays, I view CART stock as one of the most intriguing food-delivery plays from a valuation perspective.
Online grocery is where Instacart has made its mark. And it’s a corner of food delivery, I believe, it can continue to be dominant, fending off the likes of the other two rivals mentioned in this piece. Given its expertise in grocery delivery, count me as unshocked if the firm can grab incremental share in the space at the expense of its competitors.
JPMorgan’s Doug Anmuth thinks Instacart can still grab share in the space. He also thinks CART stock could rise to $33.00 per share by December 2024, representing a gain of more than 40% from here.
At around 2.2 times price-to-sales (P/S), I view the bar as quite low going into the new year, even if a mild recession incentivizes some consumers to pick up rather than order their biweekly groceries. If you are looking for some top-performing food delivery stocks, start here.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.