With evolving consumer preferences, rapid adoption of advanced technologies like AI, IoT, and cloud computing, and evolving supply chain trends have positioned the logistics market to witness robust expansion.
Given this backdrop, it could be wise to invest in fundamentally strong logistics stocks Universal Logistics Holdings, Inc. (ULH), FedEx Corporation (FDX), and AerCap Holdings N.V. (AER) positioned to benefit from global supply chain upgrades.
The global logistics market is recovering strongly from the repercussions of COVID-19 pandemic. In the previous year, the global logistics industry reached a market size of nearly $9.41 trillion. The market is further expected to exceed $14.08 trillion by 2028, broadening the logistics industry scale.
Also, online retail networks have improved accessibility for customers with a feature of convenient home delivery facilities aiding the logistic market’s expansion. Also, the recent evolution of logistics monitoring systems and cutting-edge technologies like blockchain, artificial intelligence (AI), the internet of things (IoT), and augmented reality (AR) have revolutionized various operations.
E-commerce logistics is one of the fastest-growing industries in the USA, and it surpassed the staggering 1 trillion mark for the first time in 2022. The market continues to grow with rapid technological advancements for integrating logistics through automation. The U.S. e-commerce logistics market is projected to reach $198.39 billion by 2029, growing at a CAGR of 8.9%.
Besides, new and advanced technologies, including robotic process automation (RPA), cloud computing, and artificial intelligence (AI), are replacing weak links and altering the supply chain software market, leading to rapidly changing supply chain trends. In this time, trends like supply chain as a service (SCaaS), Blockchain, and Cloud SCM solutions are likely to prevail.
Considering these encouraging economic trends, let’s delve deeper into the fundamentals of top Air Freight & Shipping Services stocks, beginning with number 3.
Stock #3: Universal Logistics Holdings, Inc. (ULH)
ULH offers transportation and logistics solutions internationally. The company provides truckload services, domestic and international freight forwarding, and customs brokerage services.
ULH’s trailing-12-month EBIT margin and net income margin of 10.75% and 7.02% are 5.9% and 15.6% higher than the respective industry average of 10.15% and 6.07%. Its trailing-12-month ROCE of 22.90% is considerably higher than the industry averages of 12.46%.
In terms of forward EV/Sales, ULH is trading at 0.82x, 54.6% lower than the industry average of 1.81x. Also, the stock’s forward Price/Sales multiple of 0.57 is 61.4% lower than the 1.47 industry average. Further, its forward Price/Cash Flow of 5.80x is 58.1% lower than the industry average of 13.85x.
During the first quarter that ended March 30, 2024, ULH’s total operating revenues increased 12.5% year-over-year to $491.91 million. Its EBITDA grew 70.8% from the year ago value to $96.90 million. The company’s net income came in at $52.46 million and $1.99 per share, up 110.9% and 109.5% from the prior year’s quarter, respectively.
Street expects ULH’s revenue for the second quarter (ended June 2024) to increase 11.9% year-over-year to $461.60 million. Its EPS for the same quarter is expected to grow 26.7% year-over-year to $1.14. Also, the company has topped the consensus revenue estimates in three of the four trailing quarters, which is impressive.
Shares of ULH have surged 34.6% over the past six months and 35.9% over the past year to close the last trading session at $41.26.
ULH’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
ULH has a B grade for Growth, Momentum, Sentiment, and Value. It is ranked #3 out of 16 stocks in the Air Freight & Shipping Services industry.
In addition to the POWR Ratings we’ve stated above, we also have ULH’s ratings for Quality and Stability. Get all ULH ratings here.
Stock #2: FedEx Corporation (FDX)
FDX provides transportation, e-commerce, and business services in the U.S. and internationally. The company operates in segments like, FedEx Express; FedEx Ground; FedEx Freight; and FedEx Services.
On March 19, FDX’s FedEx Express expanded its operations in the Middle East with its new Middle East, Indian Subcontinent and Africa state-of-the-art hub at Dubai World Central Airport in Dubai South. The launch of the hub marked a long-term investment of over $350 million into the UAE’s economy through infrastructure and technological advancements in the facility.
FDX’s trailing-12-month ROCE and ROTA of 16.14% and 4.98% are 29.5% and 1.3% higher than the industry averages of 12.46% and 4.91%, respectively. Similarly, the stock’s trailing-12-month CAPEX/Sales of 1.01x is considerably higher than the industry average of 0.78x.
In terms of forward non-GAAP P/E, FDX is trading at 14.18x, 24.3% lower than the industry average of 18.74x. Also, the stock’s forward EV/Sales multiple of 1.16 is 35.9% lower than the 1.81 industry average. Likewise, its forward Price/Sales of 0.82x is 44.4% lower than the industry average of 1.47x.
FDX’s total revenue rose marginally year-over-year to $22.11 billion for the fourth quarter that ended May 31, 2024. Its non-GAAP operating income increased 5.6% from the year-ago value to $1.87 billion. The company’s non-GAAP net income came in at $1.34 billion and $5.41, indicating increases of 7.2% and 9.5% from the prior year’s quarter, respectively.
Street expects FDX’s revenue and EPS for the first quarter (ending August 2024) to increase 1.9% and 10.1% year-over-year to $22.09 billion and $5.01, respectively. Furthermore, the company surpassed the consensus EPS estimates in three of the trailing four quarters.
FDX’s stock has gained 18.3% over the past month and 20.9% over the past six months to close the last trading session at $300.45.
FDX’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Growth, Sentiment, and Quality. FDX is ranked #2 among 16 stocks in the Air Freight & Shipping Services industry.
Click here to access FDX’s ratings for Stability, Value, and Momentum.
Stock #1: AerCap Holdings N.V. (AER)
Headquartered in Dublin, Ireland, AER leases, finances, sells, and manages commercial flight equipment in China, Hong Kong, Macau, the U.S., Ireland, and internationally.
On June 12, AER signed lease agreements for four 737-800 Boeing Converted Freighter (BCF) aircraft with JD Airlines, the cargo airline of JD Logistics, scheduled for delivery in 2024.
On May 8, AER entered into deal with Safran Aircraft Engines and Shannon Engine Support to purchase 150 new CFM LEAP spare engines valued at about $3 billion. The additional engines will be delivered in line with the growing fleet of in-service Boeing 737MAX and Airbus A320neo Family aircraft.
AER’s trailing-12-month gross profit margin and EBIT margin of 58.81% and 52.69% are 88.5% and 419.2% higher than the industry averages of 31.21% and 10.15%, respectively. Similarly, the stock’s trailing-12-month net income margin of 42.81x is significantly higher than the industry average of 6.07x.
In terms of forward non-GAAP P/E, AER is trading at 9.00x, 52% lower than the industry average of 18.74x. Similarly, the stock’s forward EV/EBITDA multiple of 9.48 is lower than the 11.21 industry average. Likewise, its forward Price/Book of 1.06x is 60.7% lower than the industry average of 2.70x.
For the first quarter that ended March 31, 2024, AER’s total revenues and other income increased 8.2% year-over-year to $2.02 billion. The company’s net income attributable to AER and EPS stood at $604.21 million and $3.02, up 39.8% and 68.7% from the prior year’s quarter, respectively.
Analysts expect AER’s revenue for the fiscal year (ending December 2025) to increase 2.8% year-over-year to $7.97 billion, and its EPS is expected to grow 5.9% year-over-year to $11.27. Moreover, the company has topped the consensus EPS estimates in each of the trailing four quarters, which is impressive.
AER’s stock has soared 29.8% over the past six months and 48.7% over the past year to close the last trading session at $96.36.
AER’s POWR Ratings reflect its solid outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Sentiment and a B grade for Quality. Within the same industry, AER has topped among 16 stocks.
Click here to access additional ratings of AER for Growth, Stability, Momentum, and Value.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
FDX shares were trading at $299.70 per share on Friday afternoon, up $0.16 (+0.05%). Year-to-date, FDX has gained 19.72%, versus a 19.22% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
3 Logistics Stocks Positioned to Benefit From Global Supply Chain Upgrades StockNews.com
