We recently compiled a list of the 7 Best Warehouse Stocks To Buy According to Analysts. In this article, we are going to take a look at where Prologis, Inc. (NYSE:PLD) stands against the other warehouse stocks.
The Global Warehousing Industry at a Glance
According to a report by IMARC, the global warehousing and storage industry was valued at $505.1 billion in 2023 and is expected to grow to $700.2 billion by 2032, at a compound annual growth rate of 3.5% between 2024 and 2032.
On a regional level, Asia Pacific currently dominates the global market. India’s booming warehousing and logistics sector has been witnessing a strong momentum. As reported by the real estate research and brokerage firm Colliers India, the sector recorded $2.5 billion in inflows in Q2. The industrial and warehousing sector accounted for 61% of total investments with $1.5 billion. As compared to Q2 2023, the institutional investments in the industrial and warehousing segment surged 11 times. The rapidly growing e-commerce and retail consumption in the country are expected to drive the demand for AI-enabled warehouses and micro-fulfillment centers in the next quarters.
Global giants have also looked to expand into India’s warehousing market in an attempt to diversify their supply chains beyond China and leverage the national economic boom and growth potential over the next 15 to 20 years. However, India lags in the warehousing stock with estimates from Avendus Capital stating that China has three times more than India’s 412 million square feet of Grade A warehouses meanwhile the US has 13 billion square feet of warehousing stock.
In light of the current events taking place in the US, a surprising sector that could potentially benefit from the ongoing port strikes is warehousing. This is the event of the first such shutdown in almost 50 years with tens of thousands of dockworkers going on strike indefinitely at ports across much of the country. As analyzed by CNBC’s Diana Olick, warehouses will see more demand and higher pricing power as tenants need workarounds for their goods and containers. An example of this case is the cold storage warehouse firms such as those storing food inventory which are expected to experience increased demand in the case of import disruptions. Warehouse REITs such as Prologis are providing storage areas to temporarily store inventory. However, this is only a short-term win since ports closing for the long term will be a loss for all including warehouses with no goods coming in or out of them. Since the warehouse construction has been low and occupancy rates on warehouses are currently high, the higher pricing power is only valid for the short term.
Our Methodology:
In order to compile a list of the 7 best warehouse stocks to buy according to analysts, we first sifted through ETFs and online rankings to gather a preliminary list of 25 such stocks. We then selected the top 7 stocks that had the highest upside potential, according to Wall Street analysts. The best warehouse stocks to buy according to analysts are arranged in ascending order of their average upside potential, as of October 3.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. 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 logistic facility within the industrial real estate sector.
Prologis, Inc. (NYSE:PLD)
Average Upside Potential: 11.13%
Number of Hedge Fund Holders: 56
Prologis, Inc. (NYSE:PLD) is a global industrial real estate investment trust that owns and manages space for warehouses, distribution, manufacturing, and large-scale storage. The firm leases modern logistics facilities to 6,700 customers across two categories including business-to-business and retail/online fulfillment. It has built its legacy through the acquisition, development, and maintenance of the largest collection of high-quality logistics real estate globally.
Prologis, Inc. (NYSE:PLD) has emerged as one of the largest warehouse-focused REITs. The company claims that 2.8% of the global GDP flows through its distribution centers globally. Additionally, its irreplicable premier global portfolio makes it stand out. The firm owned or had investments in properties and development projects amounting to nearly 1.2 billion square feet in 19 countries, as of June 30.
The warehouse operator leased 52 million square feet in its portfolio during the second quarter representing a 27% increase over the first quarter and one of its highest quarters in the past years. While the customer demand was subdued, it is improving and is expected to continue improving which is a positive omen for Prologis. The firm also sees its future growth in opportunities in data centers and energy.
Prologis, Inc. (NYSE:PLD) has one of the largest global portfolios of logistics real estate and an industry-leading position. The stock has an average upside potential of 11.13%, as of October 3.
Overall PLD ranks 7th on our list of the best warehouse stocks to buy according to analysts. While we acknowledge the potential of PLD as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PLD 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.