11 Best Logistics Stocks to Buy
In this article, we discuss the 11 best logistics stocks to buy now. If you want to skip our detailed discussion on the logistics industry, you can go directly to the 5 Best Logistics Stocks to Buy.
According to Precedence Research, the size of the logistics industry stood at $10.68 trillion at the end of 2022. The industry is set to experience a compound annual growth rate (CAGR) of 5.48% to reach a size of $18.23 trillion by 2032. Meanwhile, London, UK-based professional services firm PricewaterhouseCoopers (PwC) estimates that the logistics industry generates an estimated annual revenue of $4.6 trillion. Presently, the North American region dominates the logistics industry. The logistics industry can be broadly categorized into three notable groups based on their business models. A first-party logistics (1PL) provider is a basic form of logistics management where a company or organization handles its own logistics operations internally. A second-party logistics (2PL) provider comes into play when a company engages in a direct logistics partnership with another company. Meanwhile, a third-party logistics (3PL) provider is a dedicated entity that handles the transportation, inventory management, warehousing, and other services for any company.
One of the main drivers in the growth of the global logistics industry is the boom in the e-commerce industry. According to the United Nations Conference on Trade and Development (UNCTAD), the COVID-19 pandemic has increased the contribution of e-commerce sales as part of total retail sales from 16% to 19% in 2020. Leading e-commerce companies like Alibaba Group Holding Limited (NYSE:BABA), Amazon.com, Inc. (NASDAQ:AMZN), JD.com, Inc. (NASDAQ:JD), and PDD Holdings Inc. (NASDAQ:PDD) experienced their top-line increase by 70% between 2019 and 2021 and the total share of these prominent e-commerce platforms as a percentage of total global e-commerce sales increased from 75% in 2019 to 80% in 2021. Such dynamic growth in the e-commerce industry has resulted in some of the biggest global logistics and shipping companies expanding their operations and investing heavily in artificial intelligence (AI), automated warehouses, the Internet of Things (IoT), predictive analysis, and real-time tracking.
The logistics industry is anticipated to experience tailwinds as road connectivity in developing countries is now improving. This improvement in road connectivity is expected to offer greater upside potential to the best transportation stocks, such as CSX Corporation (NASDAQ:CSX), FedEx Corporation (NYSE:FDX), and Union Pacific Corporation (NYSE:UNP). One notable measure intended to give a boost to the industry is the Belt and Road Initiative (BRI), also known as the New Silk Road, launched by China in 2013. The initiative includes a wide network of highways and railroads expanding into former Soviet countries in the West. Meanwhile, in the South, China intends to expand this network through its neighboring countries, Pakistan and India. China has been able to reach agreements with 147 countries of the world that are responsible for contributing two-thirds of the global gross domestic product (GDP). The biggest component of the BRI is the China-Pakistan Economic Corridor (CPEC), with an estimated cost of $62 billion. To date, China has spent over $1 trillion on the BRI, with experts believing that the total outlay could reach $8 trillion by the time of completion. Investors seeking opportunities in the logistics sector are considering investing in trucking stocks with dividends and freight stocks.
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Our Methodology
We used Insider Monkey’s database of 943 hedge funds as of Q1 2023 to shortlist the 11 best logistics stocks. All the companies in our list are publicly traded logistics companies. The stocks have been ranked in ascending order of the number of hedge funds holding a stake in them as of Q1 2023.
11 Best Logistics Stocks to Buy
11. Hub Group, Inc. (NASDAQ:HUBG)
Number of Hedge Fund Holders: 25
Dollar Value of Hedge Fund Holdings: $131,124,000
Hub Group, Inc. (NASDAQ:HUBG) is an Oak Brook, Illinois-based provider of transportation management and logistics services to various industries. The company was established in 1971.
On June 29, Bascome Majors at Susquehanna increased the price target on Hub Group, Inc. (NASDAQ:HUBG) from $97 to $115 and maintained a Positive rating on the stock. The analyst added that the pricing pressure for truckload and intermodal companies has been fiercer than anticipated. At the end of Q1 2023, 25 hedge funds reported owning a stake in Hub Group, Inc. (NASDAQ:HUBG).
10. ArcBest Corporation (NASDAQ:ARCB)
Number of Hedge Fund Holders: 26
Dollar Value of Hedge Fund Holdings: $96,747,000
ArcBest Corporation (NASDAQ:ARCB) is a Fort Smith, Arkansas-based logistics company founded in 1923. The company is a leading provider of less-than-truckload (LTL) transportation in North America.
In a research note issued on June 30, Christian Wetherbee at Citigroup increased the price target on ArcBest Corporation (NASDAQ:ARCB) from $110 to $118 and reiterated a Buy rating on the stock. The possibility of Yellow Corporation (NASDAQ:YELL) heading towards bankruptcy or a restructuring with a smaller fleet is expected to be a positive development for LTL transportation providers like ArcBest Corporation (NASDAQ:ARCB). The company pays a quarterly dividend of 12 cents per share to its shareholders.
9. XPO, Inc. (NYSE:XPO)
Number of Hedge Fund Holders: 30
Dollar Value of Hedge Fund Holdings: $936,903,000
XPO, Inc. (NYSE:XPO) is a Greenwich, Connecticut-based transportation and logistics company that offers a wide range of services. The company is also anticipated to be a beneficiary of a possible bankruptcy or restructuring of Yellow Corporation due to its significant presence in the LTL transportation services segment across North America. Ken Hoexter at Bank of America upgraded XPO, Inc. (NYSE:XPO) stock from a Neutral to a Buy rating on June 28 and increased the target price from $57 to $65.
Here's what Alger Capital said about XPO, Inc. (NYSE:XPO) in its Q4 2022 investor letter:
“XPO, Inc. (NYSE:XPO) is the fourth largest less-than-truckload (LTL) service provider in North America. Following its late October spin-off of RXO, Inc., which provides freight brokerage services and last mile logistics, XPO has become a solid pureplay LTL company. During the period, shares of XPO outperformed after the RXO spin-off transaction was consummated in late October and helped unlock the sum of parts value as the market was undervaluing both assets. Moreover, shares of most LTL companies rallied from October to mid-November as part of a broader rally in cyclical stocks.”
8. Expeditors International of Washington, Inc. (NASDAQ:EXPD)
Number of Hedge Fund Holders: 31
Dollar Value of Hedge Fund Holdings: $254,163,000
Expeditors International of Washington, Inc. (NASDAQ:EXPD) is a Seattle, Washington-based Fortune 500 logistics and freight forwarding company with a presence in more than 100 countries globally.
According to Insider Monkey’s proprietary hedge fund database, Jean-Marie Eveillard’s First Eagle Investment Management is the biggest hedge fund holder of the shipping logistics stock, with around 2.75 million shares as of Q1 2023. It must be noted that four of the top five hedge fund holders of Expeditors International of Washington, Inc. (NASDAQ:EXPD) during Q1 2023 either increased their holding or initiated a new position in the stock.
7. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)
Number of Hedge Fund Holders: 33
Dollar Value of Hedge Fund Holdings: $786,246,000
J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is a Lowell, Arkansas-based logistics and truckload transportation services provider that came into being in 1961.
In a note issued to investors on June 30, an analyst at Citi increased the price target on J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) from $200 to $207 and reiterated a Buy rating on the stock. The analyst anticipates modestly improving trends for the trucking industry during the second half of this year. There is a widespread belief that the truckload-levered transporters will see a bottom in Q2 2023.
Wedgewood Partners shared its stance on J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) in its Q1 2023 investor letter. Here’s what the firm said:
“As we continue to familiarize our clients with our SMID portfolio’s holdings, we would like to discuss our significant exposure to the U.S. Transportation industry. We currently have three transportation holdings and have been substantially overweight the industry in comparison to the Russell 2500 index for several years. While these undoubtedly are cyclical business models, we see many long-term tailwinds for the domestic Transportation industry, which will provide attractive growth levels and will allow these companies to improve their returns on investment over time.
J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is the country’s largest independent provider of intermodal transportation services, with smaller businesses in trucking and logistics. Intermodal transportation refers to freight deliveries that require the use of more than one “mode” of transportation, most often including some combination of ocean, railroad, and truck between source and destination. J.B. Hunt generally provides the rail portion of these intermodal loads.
J.B. Hunt benefited from the exacerbated shortage in Truckload capacity in both their intermodal business—where they could directly substitute railroad service for people who weren’t able to find TL capacity—and in their smaller, but rapidly growing Dedicated TL division, where the company takes over all or a portion of a shipping customer’s trucking fleet. While customers were paying significantly higher prices and still struggling to find any trucking capacity, they found it very attractive to contract for a dedicated, outsourced fleet with J.B. Hunt.”
6. Old Dominion Freight Line, Inc. (NASDAQ:ODFL)
Number of Hedge Fund Holders: 37
Dollar Value of Hedge Fund Holdings: $571,041,000
Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is a Thomasville, North Carolina-based LTL freight service provider that was established in 1934. The company has the distinction of having 12 billionaires amongst its shareholders, with an estimated combined holding value of $311.9 million. On June 28, Ken Hoexter at Bank of America also upgraded Old Dominion Freight Line, Inc. (NASDAQ:ODFL) stock from a Neutral to a Buy rating and increased the target price from $331 to $391.
Here's what The London Company said about Old Dominion Freight Line, Inc. (NASDAQ:ODFL) in its Q1 2023 investor letter:
“Old Dominion Freight Line, Inc. (NASDAQ:ODFL) – ODFL outperformed during Q1, reflecting strong operating performance in a negative freight market. ODFL has a relentless focus on service and quality, which resonates with customers in good times and bad. Management’s focus on cost containment this quarter resulted in record levels of profitability, and the company continues to execute on its long-term growth plan. ODFL is widely held as one of the best franchises in transportation.”
In addition to Old Dominion Freight Line, Inc. (NASDAQ:ODFL), companies such as CSX Corporation (NASDAQ:CSX), FedEx Corporation (NYSE:FDX), and Union Pacific Corporation (NYSE:UNP) are also amongst the best logistics stocks to buy.
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Disclosure: None. 11 Best Logistics Stocks to Buy is originally published on Insider Monkey.
