Take out essentials like Pizza and Wings don’t look like a seasoned investor’s priority. But amid the pandemic, these stocks have become an interesting asset as consumer trends continue to go towards ordering in, even as restaurants are back open.
The pandemic had Americans ordering in more than ever since Indoor and outdoor dining were closed; now that restaurants have reopened, the trend hasn’t changed much.
Stocks like Domino’s Pizza, Papa John’s International, and WingStop Inc. are up at least 33% this year, well ahead of the restaurant average of 16%. Papa John’s International published results on Thursday, joining the Pizza and Wing stocks group above Wall Street’s expectations.
The results come as a relief for investors as these three stocks went to year-lows in early March as outdoor and indoor dining at restaurants resumed and vaccination levels rose. However, pizza and wing dominance on the delivery market and online sales shook of those fears, and the stocks have continued gains; and sales keep showing promising results.
“As people get vaccinated and as the dining rooms reopen, people thought that the full-service would take more share from the fast food, especially companies that rely heavily on delivery,” said Bloomberg analyst Mike Halen. However, this is not the case as full-service dining stocks such as Cheesecake Factory and BJs Restaurants have paired their gains at 19% and just 1%, respectively.
These delivery stocks have just come out of a wonderful year. WingStop gained 54% in 2020, and Domino’s had a gain of 34% last year. As the Delta Variant spreads, Indoor and full-service dining restrictions could come back and give these companies another sales boost.
The market expected the delivery stocks to go down as the economy reopened and restrictions were eased, but this didn’t happen. The considerable delivery market in the United States is expected to grow 10% this year, and there is no expectation for it to slow down. This may be because delivery companies are very receptive to consumer trends, and convenience is a trend right now.
Because of all of the above and many other factors, the delivery market’s expectations remain bullish and seem to be a good investment towards the future. As many other industries face uncertainty, we can always rely on people buying food, especially if it’s delivered to their homes.
Do you see long-term opportunities for the pizza and wing industries? Let us know in the comments below.
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