We recently compiled a list of the 11 Best Logistics Stocks to Invest in Right Now. In this article, we are going to take a look at where GXO Logistics, Inc. (NYSE:GXO) stands against the other logistics stocks.
The Logistics Industry: Current Dynamics
Logistics companies transporting goods around the world continue to navigate uncertainty as Donald Trump plans to impose 60% tariffs on goods from China and 25% tariffs on goods from Mexico and Canada. As reported by CNBC, Dave Bozeman, the new CEO of C.H. Robinson, sees an opportunity in Trump tariffs. The logistics giant is a top 3 carrier on the China-U.S. freight lane also carrying nearly 10% of the freight on the US-Mexico lane. Citi transportation analyst Ari Rosa considers the company’s business diversified enough to work through tariffs despite its global forwarding business being very exposed to China. The CEO’s stance on the tariffs was quite positive as well, as he stated:
“The freight still has to move. It might just move at a different starting point, and we would still be there to move that.”
In an interview with CNBC, Ravi Jakhar of the firm Allcargo Group, the world’s LCL consolidation leader and India’s largest integrated logistics solutions provider, reiterated optimism regarding the Trump tariff risks. He mentioned how over 4 years ago when sanctions came in from the Trump administration, the firm saw an increased import into its Vietnam offices from China and improved export out of Vietnam, alongside increased momentum in Indonesia and the Philippines. In his opinion, whether it is a short-term tariff sanction or a long-term structural trend, trade flows could change in terms of origins and destinations but the overall trade flows would remain robust as long as manufacturing and consumption are there.
As of what’s recent in the logistics landscape, the holiday season is in full swing, with holiday surcharges playing a crucial role in profitability for logistics companies since they charge their big retail customers extra fees on a per-package basis compared to their June volume during the busy holiday season. The increase in e-commerce is also benefitting such logistics providers and full truckload carriers. Simultaneously, an increase in freight in anticipation of future tariffs is also being seen.
A survey from Merchants Fleet and Atomik Research of decision-makers in organizations that typically transport freights of consumer-packaged goods throughout the US revealed that 88% saw AI as useful in alleviating pressures on their fleets this peak delivery season. AI’s data-driven capabilities are to streamline operations and decision-making, with the majority of the respondents citing supply chain optimization as a primary benefit. Other advantages mentioned were improved route optimization, enhanced inventory management, and reduced downtime by identifying maintenance issues with fleet vehicles.
Our Methodology:
In order to compile a list of the 11 best logistics stocks to invest in right now, we went through stock screeners, ETFs, and media reports to make a list of relevant stocks. Moving on, we shortlisted the top 11 stocks from our list which had the highest number of hedge fund holders. The 11 best logistics stocks to invest in right now have been arranged in ascending order of their hedge fund holders as of Q3 2024.
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 fleet of trucks leaving a depot, loaded with consumer goods, representing the companies logistical services.
GXO Logistics, Inc. (NYSE:GXO)
Number of Hedge Funds: 33
GXO Logistics, Inc. (NYSE:GXO) is the world’s largest pure-play contract logistics provider. The company provides warehousing and distribution, order fulfillment, e-commerce, reverse logistics, and other supply chain services. It serves a range of industries including aerospace, agribusiness, e-commerce, healthcare, and public sector among others. The company is headquartered in Greenwich, Connecticut.
GXO serves as a global leader in offering cutting-edge logistics solutions for multinational companies and blue-chip market leaders. The company’s extensive experience in B2B and B2C verticals and its significant investments in innovation have positioned it strongly to capitalize on the industry tailwinds including growth in e-commerce, customer demand for advanced automation, and the trend toward outsourcing supply chain services.
The business momentum stays strong for GXO Logistics, Inc. (NYSE:GXO) as the firm closed the third quarter of 2024 with a record quarterly revenue of $3.2 billion, which reflected growth of 28% year-over-year as well as a sequential improvement in organic revenue growth and strong free cash flow. Another major milestone for GXO was signing approximately $750 million in annualized revenue year to date which makes the firm all set to deliver a record year for new business wins in 2024.
The aforementioned tailwinds continue to drive the company’s performance, with the rising demand for e-commerce capacity being a major one. This is evident from the fact that over half of the firm’s new wins in the third quarter originated from e-fulfillment while GXO also opened the largest ecommerce warehouse in France.
Overall GXO ranks 9th on our list of the best logistics stocks to invest in right now. While we acknowledge the potential of GXO 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 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.