What Makes DoorDash (DASH) a Good Investment?

TimesSquare Capital Management, an equity investment management company, released its “U.S. Mid Cap Growth Strategy” second-quarter investor letter. A copy of the same can be downloaded here. The equity markets performed well in the second quarter, as long as one held only a small number of the biggest, fastest-growing U.S. stocks. Given the Magnificent Seven's superior performance, differences in growth and value among large caps were downplayed. There wasn't much style diversity between mid-caps, small caps, or outside the U.S. In the second quarter, the strategy returned -2.94% (gross) and -3.14% (net) while the Russell Midcap Growth Index returned -3.21%. In addition, please check the fund’s top five holdings to know its best picks in 2024.

TimesSquare Capital U.S. Mid Cap Growth Strategy highlighted stocks like DoorDash, Inc. (NASDAQ:DASH) in the second quarter 2024 investor letter. DoorDash, Inc. (NASDAQ:DASH) is a commerce platform that connects merchants, consumers, and independent contractors. The one-month return of DoorDash, Inc. (NASDAQ:DASH) was -0.08%, and its shares gained 56.89% of their value over the last 52 weeks. On September 12, 2024, DoorDash, Inc. (NASDAQ:DASH) stock closed at $130.19 per share with a market capitalization of $53.579 billion.

TimesSquare Capital U.S. Mid Cap Growth Strategy stated the following regarding DoorDash, Inc. (NASDAQ:DASH) in its Q2 2024 investor letter:

"Our preferences in the Consumer-oriented sectors lean toward value-oriented or specialty retailers, franchise models, or premium brands. New to the strategy was the online food delivery platform and logistics provider DoorDash, Inc. (NASDAQ:DASH) Since its IPO in 2021, the company’s scale has grown to entrench it with customers and consumers, though we have been cautious about its high valuation. Recently, the company reported lower-than-expected guidance for future margins and that caused its shares to sell off. In our view, DoorDash was appropriately investing for future growth and absorbing recent increased wage costs. Believing this short-term price dislocation made for an attractive entry price, we began buying, and DoorDash was up 2% through the end of the quarter."

A shot of a delivery driver zooming down a busy street, symbolizing the company's quick and efficient delivery services.

DoorDash, Inc. (NASDAQ:DASH) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held DoorDash, Inc. (NASDAQ:DASH) at the end of the second quarter which was 76 in the previous quarter. While we acknowledge the potential of DoorDash, Inc. (NASDAQ:DASH) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed DoorDash, Inc. (NASDAQ:DASH) and shared the list of largest publicly traded food companies in 2024. DoorDash, Inc. (NASDAQ:DASH) detracted from the performance of Carillon Eagle Mid Cap Growth Fund during Q2 2024. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.