We recently published a list of 7 Best Delivery Stocks To Invest In Now. In this article, we are going to take a look at where Old Dominion Freight Line Inc. (NASDAQ:ODFL) stands against other best delivery stocks to invest in now.
An Overview of the Delivery and Courier Industry
The delivery and courier industry is diverse, encompassing a wide range of services that connect businesses and consumers through various shipping methods. Parcel delivery services are a major component, with companies offering both domestic and international shipping options, driven by the rise of e-commerce.
Another significant segment is food delivery platforms. These platforms connect hungry customers with local eateries, creating a new business model that thrives on convenience. Overall, the delivery industry is evolving rapidly, with diverse players working to meet the growing expectations for speed and reliability in shipping services.
According to Zion Market Research, the global on-demand delivery market was valued at $15.19 billion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 20.90% during 2024-2032 to reach $83.82 billion by the end of the forecast period. In 2023, the Asia-Pacific region led the market in revenue and is projected to maintain its dominance throughout the forecast period.
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This growth is fueled by increasing consumer expectations for fast and reliable delivery services, particularly same-day and next-day options. Experts highlight that the demand for quick deliveries has led to substantial investments in last-mile delivery solutions and advanced technologies, such as automation and artificial intelligence (AI).
In 2024, consumers have continued to prioritize free and fast shipping for their online orders, according to recent data from Digital Commerce 360 and Bizrate Insights. A survey of 1,013 online shoppers revealed that 81.34% consider free shipping their top priority when receiving deliveries. Fast shipping follows closely, with 68.41% of respondents highlighting its importance. Additionally, 55.68% of consumers emphasized the need for retailers to keep products in stock and ready to ship.
AI and automation are key trends that are significantly transforming the delivery services industry, making operations more efficient and responsive to consumer demands. For example, companies like DHL Express have introduced the DHLBot in Singapore and South Korea. The DHLBot is an AI-powered robotics arm that can sort over 1,000 small parcels per hour with 99% accuracy. This technology not only speeds up the sorting process but also reduces labor costs and minimizes errors, allowing for quicker deliveries.
As the industry evolves, it is clear that AI and automation will play a crucial role in shaping the future of delivery services.
Methodology
To compile our list of the 7 best delivery stocks to invest in now, we used the Finviz and Yahoo stock screeners to find the largest delivery companies. We also reviewed our own rankings and consulted various online resources. From an initial pool of more than 20 delivery stocks, we focused on the top 7 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 7 best delivery stocks to invest in now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A large fleet of freight trucks travelling down an interstate highway.
Old Dominion Freight Line Inc. (NASDAQ:ODFL)
Number of Hedge Fund Holders: 43
Old Dominion Freight Line Inc. (NASDAQ:ODFL) is a delivery company that specializes in less-than-truckload (LTL) freight shipping. The company provides regional, inter-regional, and national shipping and transportation services. As one of the largest LTL carriers in North America, Old Dominion also maintains strategic alliances with other carriers to provide transportation services throughout the region.
In the second quarter of 2024, Old Dominion Freight Line Inc. (NASDAQ:ODFL) reported strong financial results, achieving a 6.1% year-over-year increase in revenue, primarily driven by a 4.4% rise in LTL revenue. This marks the third consecutive quarter of growth in both revenue and earnings per share, with earnings increasing by 11.3% year-over-year to reach $1.48 per share. The company attributes its success to a long-term strategic plan focused on providing superior service at competitive prices, which has helped strengthen customer relationships and support its yield-management strategy.
The company is also making significant investments in its operations, with capital expenditures totaling $238.1 million in the second quarter alone. Old Dominion Freight Line Inc. (NASDAQ:ODFL) plans to invest approximately $750 million throughout 2024 for projects that include expanding service centers and upgrading technology.
In the first half of the year, Old Dominion Freight Line Inc. (NASDAQ:ODFL) utilized $637.1 million of cash for its share repurchase program and paid out $112.6 million in cash dividends to its shareholders, reflecting its commitment to returning value to investors.
Over the past 10 years, Old Dominion Freight Line Inc. (NASDAQ:ODFL) has grown its revenue at a compound annual growth rate (CAGR) of 8.95%, while its net income has increased at a CAGR of 18.85% during the same period.
According to Insider Monkey’s Q2 database of over 900 hedge funds, 43 hedge funds held stakes in ODFL. Weitz Investment Management stated the following regarding Old Dominion Freight Line Inc. (NASDAQ:ODFL) in its “Partners III Opportunity Fund” second-quarter 2024 investor letter:
“We purchased a new position in Old Dominion Freight Line Inc. (NASDAQ:ODFL), one of the largest providers of “less than truckload” (LTL) trucking services. ODFL has long been regarded as the highest-quality LTL operator by customers, employees/drivers, and owners alike, with the profit margins and balance sheet strength to prove it. Similar to IDEX, we are not attempting to “call the bottom” of the recent downturn in industry freight volumes. Instead, we note ODFL’s long track record of successful investing through cycles to better position and grow their logistics network, resulting in better service for customers and market share growth.”
Overall, ODFL ranks 7th on our list of best delivery stocks to invest in now. While we acknowledge the potential of delivery companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ODFL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.