3 Food Delivery Stocks Set To Gain As COVID-19 Lockdowns Boost Demand

3 Food Delivery Stocks Set To Gain As COVID-19 Lockdowns Boost Demand

Investing.com  | Mar 25, 2020 04:57

As the coronavirus continues to spread rapidly around the globe, infections in the U.S. are on the rise with at least 55,231 confirmed cases and 801 deaths reported.

To contain the pandemic in the U.S., states are taking lockdown measures to reduce the number of social interactions. The majority of states have prohibited dining at restaurants, permitting only delivery and pick-up options.

While Wall Street is on track to suffer its worst month since the Great Depression, some food delivery stocks are thriving on expectations that even more Americans will order in as they are confined to their homes in the weeks ahead. These three stocks are well-positioned to benefit:

1. Domino’s Pizza

Domino’s Pizza (NYSE:DPZ) is known for its delivery service, which accounts for about 55% of total orders. As an increasing number of people are opting for take-out, the Ann Arbor, Michigan-based pizza chain has been displaying robust relative strength amid the ongoing coronavirus market correction. Shares of the corporation, which are up about 22% over the past month-and-a-half, settled at $343.56 last night, giving it a market cap of roughly $13.4 billion.

Domino's Pizza Daily Chart

The multinational pizza chain with 17,000 stores in more than 90 countries around the world officially began implementing its ‘Contact Free Delivery’ service due to the COVID-19 outbreak this week in the U.S. as well as other countries impacted by the virus, like India, the United Kingdom, Ireland, and Australia.

The company announced last week that it expects to hire about 10,000 workers in the U.S. alone to meet increased orders at a time when the coronavirus pandemic has resulted in restaurants across the country laying off thousands of workers.

“Our corporate and franchise stores want to make sure they’re not only feeding people, but also providing opportunity to those looking for work at this time, especially those in the heavily-impacted restaurant industry,” CEO Ritch Allison said in a statement on March 19.

2. Blue Apron

Blue Apron (NYSE:APRN) is a New York-based online meal-kit company that delivers pre-measured ingredients, with which customers cook recipes of their choice. By making home cooking easy and accessible, Blue Apron has gained as the coronavirus outbreak in the U.S. led more Americans to seek alternatives to shuttered restaurants and emptied grocery store shelves.

Even after Tuesday’s 15% drop, this month the stock has surged an astonishing 260%, bucking the broader market rout brought on by virus fears. Shares ended at $10.36 last night, giving the food-delivery service a market cap of $137.45 million.

Blue Apron Daily Chart

Blue Apron said last week it has seen a “sharp increase” in demand for its meal kits and it is taking steps to meet the greater number of orders. “We are increasing our capacity for future orders and expect to fulfill this increased demand by the next available weekly cycle, starting on March 30,” Linda Findley Kozlowski, Blue Apron’s chief executive, said on March 19.

However, any boost in business for Blue Apron will likely taper off after the immediate threat of the COVID-19 outbreak passes and consumers return to eating out. Prior to its recent surge, shares of Blue Apron had fallen about 98% from its 2018 IPO price, plunging to $2 in late February, due to growing competition and disappointing revenue.

3. Chewy

Chewy (NYSE:CHWY) is the leading online seller of branded and private-label pet food and grooming supplies in the U.S. The Florida-based company allows customers to browse a wide variety of foods for different animals through its website and mobile applications, then receive the package directly to their door.

Like the two other companies mentioned above, Chewy has also seen its shares rise despite the broader market selloff. The online pet products retailer has benefitted as its in-home delivery model mitigates the public health concern of consumers shopping for their pets at brick-and-mortar retailers.

Chewy Daily Chart

Shares of the online pet products seller, which are up more than 27% over the past two weeks, closed at $33.65 yesterday, giving it a market cap of $12.8 billion. The stock touched a record high of $34.99 on March 19.

Chewy next reports earnings on Thursday, April 2, after markets close. Consensus calls for a loss of 15 cents per share for the fourth quarter, while revenue is forecast to total $1.35 billion.

Investing.com

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Keane Horvath
Keane Horvath

Would it not be better to play the options on those stocks in the short term?   ... (Read More)

Mar 26, 2020 01:28 GMT· Reply
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