We recently published a list of Jim Cramer is Talking About These 10 Stocks. In this article, we are going to take a look at where GXO Logistics Inc (NYSE:GXO) stands against other stocks Jim Cramer is talking about.
Jim Cramer in a latest program on CNBC said that the market is narrowing again as he sees gains getting concentrated in big tech stocks again amid bond movements.
“If the bond market doesn’t start behaving and calming down, and long-term interest rates don’t stop going up, we are gonna start losing the groups that led us higher for months and go back to our bad old ways with just a couple of magnificent ones.”
Jim Cramer said that this trend was more or less expected as market assumptions following the 50bps rate cut by the Federal Reserve proved to be wrong down the road.
But then that darn double cut—we saw something that hasn’t happened since 1995. We saw loan rates go higher, not lower. It was a total buzzkill, and we’re beginning to feel it with earnings.
Cramer then talked about a latest earnings report from a notable homebuilder that showed soft results, indicating a weaker consumer. Cramer then summarized his thesis again on why he sees the overall market trajectory in what he called a “suboptimal situation.”
“If interest rates don’t stop rising quickly—they can go up slowly, but this quick rise means we’ll go right back to the same old story. Only a few big tech stocks were winning, while many more were losing. In other words, we’re on the verge of what I can describe as an extremely suboptimal situation if the bond market doesn’t settle down.”
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In
Our Methodology
For this article we watched several latest programs of Jim Cramer on CNBC and picked 10 stocks he’s talking about. With each company we have mentioned its hedge fund sentiment. Why are we interested in 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 fleet of trucks leaving a depot, loaded with consumer goods, representing the companies logistical services.
GXO Logistics Inc (NYSE:GXO)
Number of Hedge Fund Investors: 29
A caller recently asked Jim Cramer about GXO Logistics. Here is what he said:
“I think you should hold it. It’s a really good company. It would be icing on the cake if you do get a takeover, but GXO’s been a winner. I’m not leaving that stock; I’m staying with it.”
GXO Logistics Inc (NYSE:GXO) manages supply chains for businesses by providing warehousing, transportation, and logistics services. They store products in strategically chosen warehouses and use advanced technology to optimize efficiency and reduce costs. Out of 974 facilities, 613 are leased, with only two owned. Leasing not only reduces costs but also offers flexibility, allowing them to scale operations easily as needed.
Analysts believe GXO Logistics Inc (NYSE:GXO) will grow on the back of the ecommerce revolution. Handling e-commerce orders is more profitable for GXO Logistics Inc (NYSE:GXO) than traditional wholesale or retail setups because it requires more handling. According to GXO Logistics Inc (NYSE:GXO), they can generate three times more revenue from e-commerce orders compared to wholesale and retail, with the revenue multiplier reaching up to six times in the case of returns.
The shift to e-commerce has been growing for over a decade, but the industry saw substantial growth following the COVID-19 pandemic. According to a chart from GXO Logistics Inc (NYSE:GXO)’s investor presentation, they estimate that e-commerce penetration as a percentage of total retail sales could double in six years, reaching approximately 30% by 2027.
Mar Vista Strategic Growth Strategy stated the following regarding GXO Logistics, Inc. (NYSE:GXO) in its first quarter 2024 investor letter:
“GXO Logistics, Inc. (NYSE:GXO) experienced a setback this quarter. Customer volumes dropped 9%, stalling any organic growth. This slump was primarily driven by weakness in the omnichannel retail and consumer packaging sectors. As a result, the company’s 2024 forecasts fell short of analyst expectations, leading to a drop in share price after the announcement.
Despite cyclical headwinds, there are signs of a turnaround for GXO. Management indicated that customer volumes in January have already begun to improve. Additionally, they expect easier comparisons in the later half of 2024 to further aid recovery. To us, this suggests that the first half of 2024 may be the cyclical low point, with a rebound on the horizon. Over the next few quarters, GXO should get back on track towards achieving its long-term financial goals.”
Overall, GXO ranks 9th on our list of stocks Jim Cramer is talking about. While we acknowledge the potential of GXO, our conviction lies in the belief that under the radar 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 more promising than GXO 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.