Five logistics stocks to watch as retailers build up holiday inventory

Freight and logistics stocks are in focus due to a severe global supply shortage intensified by the Covid-19 pandemic. The deficit has pushed commodity prices higher and disrupted production.

Some retailers were worried if the orders would reach on time to top-up their inventories. Because with the holiday sales season round the corner, they were hoping to capitalize on the shopping rush.

The freight and logistics providers are an integral part of the supply chain, and such, the current supply logjam offers a tremendous opportunity to them to rise and shine.

Here we discuss five transportation stocks that may benefit from the emerging opportunities.

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United Parcel Service, Inc. (NYSE: UPS)

United Parcel Service is a shipping and receiving company based in Atlanta, Georgia. It provides supply management services. It has a market cap of US$184.98 billion.

Five logistics stocks to watch as retailers build up holiday inventory

The shares traded at around US$212 on October 28. The stock gained about 29% YTD. In addition, it has a P/E ratio of 28.62 and a forward P/E one year of 18.55. Its EPS is US$7.42.

The 52-week highest and lowest stock prices were US$220.24 and US$154.76, respectively. Its trading volume was 3,309,002 on October 27. The revenue increased by 9.2% YoY to US$23.2 billion in Q3, FY21. Its net income came in at US$2.32 billion, or US$2.65 per diluted share.

The company expects its adjusted operating margin to be around 13% in fiscal 2021.

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Union Pacific Corporation (NYSE: UNP)

Union Pacific Corporation is a major railroad operating company based in Omaha, Nebraska, and provides freight-hauling services.

The stock was priced at around US$241 on October 28. The UNP stock rose 17.92% YTD. Its market cap is US$155.25 billion, the P/E ratio is 25.86, and the forward P/E one year is 23.96. Its EPS is US$9.34. The stock saw the highest price of US$243.91 and the lowest price of US$171.50 in the last 52 weeks. Its share volume on October 27 was 2,886,259.

Its operating revenue surged 13% YoY to US$5.56 billion in Q3, FY21. Its net income came in at US$1.67 billion compared to US$1.36 billion in Q3, FY20.

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XPO Logistics, Inc. (NYSE: XPO)

It is a freight transportation and logistics company based in Greenwich, Connecticut. It has a market cap of US$9.96 billion.

The shares traded at around US$87 on October 28. The stock gained about 22% YTD. It has a P/E ratio of 21 and a forward P/E one year of 19.76. Its EPS is US$4.14.

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The 52-week highest and lowest stock prices were US$153.45 and US$73.41, respectively. Its trading volume was 914,511 on October 27.

The firm will report its third-quarter financial results on November 3.

In the second quarter of fiscal 2021, the revenue increased to US$5.03 billion from US$3.50 billion a year ago. Its net income was US$158 million against a loss of US$134 million in Q2, FY20.

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Matson, Inc. (NYSE: MATX)

Matson is a transportation and navigation company based in Honolulu, Hawaii. It provides ocean transportation and logistics services. Its market cap is US$3.63 billion.

The stock was priced at around US$83 on October 28. It jumped about 45% YTD. Its P/E ratio is 9.01, and the forward P/E one year is 5.43. The EPS is US$9.29.

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The stock saw the highest price of US$91.79 and the lowest price of US$50.09 in the last 52 weeks. Its share volume on October 27 was 196,343.

It will release its third-quarter earnings on November 3.

The total operating revenue was US$874.9 million in Q2, FY21, compared to US$524.1 million in Q2 of 2020. Its net income came in at US$162.5 million, versus US$32.8 million in Q2, FY20.

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Source: Pixabay

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Hub Group, Inc. (NASDAQ: HUBG)

Hub Group is a transportation management company based in Oak Brook, Illinois, and provides truck brokerage and logistics services.

The shares traded at around US$79 on October 28. The stock gained about 39% YTD. It has a market cap of US$2.72 billion, a P/E ratio of 29.4, and a forward P/E one year of 21.07.

Its EPS is US$2.70.

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The 52-week highest and lowest stock prices were US$78.96 and US$47.52, respectively. Its trading volume was 201,069 on October 27.

The company's revenue surged 16% YoY to US$1.07 billion in Q3, FY21. Its net income came in at US$43 million, or US$1.28 per diluted share, representing an increase of 73% YoY.

The company now expects its diluted EPS for fiscal 2021 to be between US$3.90 and US$4.00. It also projected its revenue to be at the high-teens percentage range for 2021.

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Bottomline

The supply constraints have dragged down many companies' profits and forced them to trim their earnings forecast for the next quarter. The S&P Air Freight and Logistics Index grew 14.21% YTD while increasing 12.54% QTD, suggesting modest gains for the transportation sector. Investors, however, exercise due diligence before investing in the stock market.