In this article, we are going to discuss the 10 best logistics stocks to buy now. You can also check out the 20 Biggest Logistics Companies in the US here.
The logistics industry is experiencing major developments, which bring both risks and opportunities. These changes are being driven by new technology, more competitors, changing customer expectations, and new business models. The global logistics market was valued at nearly $2.6 trillion in 2022. The market is projected to grow to $4.5 trillion by 2027, expanding at a compound annual growth rate of 11.5%.
Meanwhile, the US Freight and Logistics Market is predicted to reach a value of $1.67 trillion by 2030. The domestic market is seeing expansion due to an increase in e-commerce trade within the country. The e-commerce sector saw a growth of over 14% year-over-year in 2023 to reach $925 billion. The number of e-commerce users is predicted to increase from 264.5 million in 2021 to 289.9 million by 2027. There is rising demand for logistical services particularly among online retailers that do not operate physical stores and rely heavily on third-party warehousing.
Technology is reshaping how logistics companies function. Those who succeed will be the ones who can effectively use new technologies like data analytics and platform solutions. Data analytics is considered significantly more important in the transportation and logistics (T&L) sector over the next five years compared to other industries. Around 90% of experts in T&L prioritize these aspects, higher than the average of 83% seen across other sectors.
The potential for growth is high, yet the logistics industry has been slow to capitalize on it. According to a report by PWC, only 28% of T&L companies consider themselves ‘advanced’ in digitization. In comparison, 41% of automotive companies and 45% of electronics companies already view themselves as advanced. The main hurdle for transportation and logistics firms lies in developing a ‘digital culture’ and providing good training.
The majority of newcomers in the logistics sector are startups, and many of them aim to use new technology to establish their presence in the industry. So far, most of these startups operate in asset-light segments of the value chain, such as virtual freight forwarding. Private equity flows in digital logistics startups since 2011 have surpassed $150 million, whereas funding from legacy logistics companies is less than $10 million.
A bustling distribution center, a sign of a thriving logistics business.
Our Methodology
To shortlist the best logistics stocks, we relied on Insider Monkey’s database of 920 hedge funds as of Q1 2024 to analyze the hedge fund sentiment for each stock. We picked the logistics stocks with the highest number of hedge fund investors. 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).
10 Best Logistics Stocks to Buy Now
10. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)
Number of Hedge Fund Holders: 34
Value of Hedge Fund Holdings: $1,059,070,000
J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is an American transportation and logistics company headquartered in Lowell, Arkansas, United States.
Despite the tough freight environment, the company has managed to stay conservatively leveraged, maintaining a debt-to-EBITDA ratio at or below the target of 1x for the past 12 months. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) sold about 690 new trucks during the first quarter, marking a strong beginning towards the annual sales target of 1,000 to 1,200 new trucks.
Although the company’s performance in Q1 2024 fell short of expectations, analysts remain bullish on J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) stock on the basis of long-term potential. The stock has an average price target of $189.8, reflecting an upside potential of over 20% from the current price levels. Amongst 22 analysts, 7 have rated the stock as a “Strong Buy,” 6 have rated it as “Buy,” while 9 recommend holding the stock.
As of the end of the first quarter of 2024, 34 hedge funds reported owning a stake in J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). Durable Capital Partners was the leading hedge fund investor in the company, with a stake worth over $55.2 million.
9. Old Dominion Freight Line, Inc. (NASDAQ:ODFL)
Number of Hedge Fund Holders: 38
Value of Hedge Fund Holdings: $448,280,000
Old Dominion Freight Line, Inc. (NASDAQ:ODFL) was founded in 1934 by Earl Congdon and Lillian Congdon. It is one of the largest less-than-truckload motor carriers in North America and offers other value-added services like container drayage, supply chain consultation, and truckload brokerage.
In the first quarter of 2024, the company’s net income grew by 2.6% year-over-year to reach $292.3 million, while the net profit margin recorded a YoY increase of 1.3%. Meanwhile, the company recorded an EPS of $1.34, reflecting a 3.90% increase compared to the previous year.
Analysts recently assessed Old Dominion Freight Line, Inc. (NASDAQ:ODFL) and shared their 12-month price targets. The average price target came out to be $201.53, with a low estimate of $174 and a high estimate of $233. The average price target reflects an upside potential of around 15%. Old Dominion Freight Line, Inc. (NASDAQ:ODFL) has a consensus rating of “Buy,” based on 19 analysts’ recommendations.
Here’s what Bonhoeffer Capital Management said about Old Dominion Freight Line, Inc. (NASDAQ:ODFL) in its Q1 2024 investor letter:
“In remembrance of Charlie Munger, I listened to and read his investment speeches in Poor Charlie’s Almanac. His speech to the University of Southern California business school specifically dealt with the application of worldly wisdom to investment management and business. There were five ideas presented by Munger in that speech which are particularly relevant in the Bonhoeffer portfolio. First, over the long term, it’s hard for a stock to earn more than the underlying business earns. As an illustration of this principle, we examined two firms, Old Dominion Freight Line (NASDAQ:ODFL) and Warner Brothers/Discovery (WBD).
ODFL is an example of a growth stock whose value has been driven by increases in intrinsic value over time. From a commodity trucking business, ODFL has developed a franchise over time through consolidation. Using a DCF model with analyst estimated inputs, Morningstar estimated ODFL’s intrinsic fair values, which appeared overvalued, but stock price grew by 28% per year in-line with intrinsic value which grew by 28%/year which outperformed the index average of 12.7%/year. ODFL’s average RoE was 24.5% and increased thorough the period and ended in the 30%s. The chart below shows both the stock and an estimate of its intrinsic value over time.
These trends of growth and their effects on returns are reflected in the new investments we have invested in and those firms we have sold recently. We have sold most of our telecom and media firms (which have had flat to declining intrinsic values over time). These firms have been replaced by consolidating capital light distribution firms and specialized financial services firms (which have had increased intrinsic value over time) one of which is described below.”
8. Saia, Inc. (NASDAQ:SAIA)
Number of Hedge Fund Holders: 38
Value of Hedge Fund Holdings: $561,605,000
Saia, Inc. (NASDAQ:SAIA) is a less-than-truckload trucking company that was established in 1924 in Houma, LA. The company also specializes in non-asset truckload service and third-party logistics.
In Q1 2024, Saia, Inc. (NASDAQ:SAIA) reported a net profit margin of 12.02%, reflecting an over 4% YoY increase. Meanwhile, the operating income of $117.91 million observed an over 18% YoY increase. EPS was reported at $3.38, reflecting a rise of 18.6% over the last year.
Analysts have evaluated Saia, Inc. (NASDAQ:SAIA) stock and provided 12-month price targets over the past three months, resulting in an average target price of $525.92. The price targets range from a low of $445 to a high of $578.
The new average price target represents a 14.18% increase from the previous average target of $460.6, indicating a generally optimistic outlook on the stock. Based on recommendations from 14 analysts, the stock is rated as a “Moderate Buy.”
Here’s what Madison Investments said about Saia, Inc. (NASDAQ:SAIA) in its Q4 2023 investor letter:
“Our best performing stock on an absolute basis for the year was Saia, Inc. (NASDAQ:SAIA), which benefited greatly from its improving return profile. The company has made admirable progress in improving its margins and growing capacity. While the transportation market slowed from an overheated 2022, 2023 held up better than expected and SAIA’s results exceeded expectations. SAIA also benefited from the bankruptcy of one its larger competitors, which tightened the market and helped expand SAIA’s multiple by almost 10 points.”
7. Knight-Swift Transportation Holdings Inc. (NYSE:KNX)
Number of Hedge Fund Holders: 39
Value of Hedge Fund Holdings: $729,445,000
Knight-Swift Transportation Holdings Inc. (NYSE:KNX) was founded in 1990. With over 4000 driving associates, Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is one of the largest full truckload companies in North America.
The benefits of the company’s diversification continue to be evident, as market conditions in the LTL industry are much more favorable compared to those in Truckload. The LTL business saw a nearly 13% year-over-year revenue growth, excluding fuel charges. Additionally, shipments per day rose by 6%, and revenue per hundredweight, excluding fuel surcharges, recorded a year-over-year increase of 3%.
Analysts have given Knight-Swift Transportation Holdings Inc. (NYSE:KNX) an average rating of “Moderate Buy.” Among the analysts, 6 recommend holding the stock, while 10 suggest buying it. The average target price is $55.94, with estimates ranging from a low of $47 to a high of $72.
Knight-Swift Transportation Holdings Inc. (NYSE:KNX) ranks seventh on our list of the best logistics stocks to buy in 2024.
6. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 43
Value of Hedge Fund Holdings: $969,765,000
United Parcel Service, Inc. (NYSE:UPS) is a multinational shipping and supply chain management company. It is also among the world’s largest parcel delivery companies with 500+ planes and 100,000+ vehicles.
The company delivers an average of 22 million packages per day, with 64% of its revenue coming from domestic packages and 20% from international operations. By the end of the fiscal year 2023, United Parcel Service, Inc. (NYSE:UPS) achieved a return on assets (ttm) of 7.99% and a return on equity (ttm) of 32.04%.
In the first quarter of 2024, United Parcel Service, Inc. (NYSE:UPS) reported an EPS of $1.43, exceeding the estimated $1.34. The company has outperformed EPS estimates for the past three consecutive quarters.
The stock has an average 12-month price target of $160.7, suggesting an upside potential of over 17% from the current price levels. Overall, 43 hedge funds hold a stake in the company as of Q1 2024.
Here’s what Artisan Partners said about United Parcel Service, Inc. (NYSE:UPS) in its Q1 2024 investor letter:
“United Parcel Service, Inc. (NYSE:UPS) was a Q4 2023 purchase. When we initiated our position, shares were under pressure due to concerns about its new labor contract diverting volumes and driving up costs, as well as the continued normalization of volumes following COVID-related gains. The stock moved higher after we purchased it but gave up those gains in January when the company reported weaker-than-expected shipping volumes and a decline in revenue in the prior quarter. Despite the long-term growth tailwinds from the secular shift toward e-commerce, the shipping business is still cyclical, so disappointments will happen. However, we welcomed the market’s short-term focus as it provided us an opportunity to purchase UPS at an undemanding valuation of less than 11X our view of normalized earnings. UPS is a good transport operation that easily earns its cost of capital, generates significant free cash, has a wide economic moat, has a strong financial profile and pays an attractive dividend yielding 4%. With the new 5-year labor agreement completed, we believe UPS can focus on regaining lost volume and improving its cost structure.”
5. XPO, Inc. (NYSE:XPO)
Number of Hedge Fund Holders: 47
Value of Hedge Fund Holdings: $3,327,498,000
XPO, Inc. (NYSE:XPO) is an American supply chain and transportation company headquartered in Greenwich, Connecticut, founded in 2000. The company currently employs 13,000 drivers and operates 40,000 tractors and trailers, along with 293 service centers across America.
In the first quarter of 2024, XPO, Inc. (NYSE:XPO) reported a revenue of $2.02 billion and an EPS of $0.81, exceeding expectations with a revenue surprise of 0.67% and an EPS surprise of 19.98%. The company also reported a net income of $67 million and a net profit margin of 3.32%. XPO, Inc. (NYSE:XPO) has achieved a remarkable 5-year return of 427.53%, significantly outperforming the benchmark S&P 500’s 5-year return of 84.98%.
Analysts have set an average 12-month price target of $137.08 for XPO, Inc. (NYSE:XPO). The price targets range from a high of $145 to a low of $120. The average target suggests a potential upside of 30.3% from the current price levels.
Here’s what ClearBridge Investments said about XPO, Inc. (NYSE:XPO) in its Q3 2023 investor letter:
“Our holdings in the industrials sector also contributed during the quarter. XPO, Inc. (NYSE:XPO), which provides freight transportation services internationally, rallied on the news that industry competitor Yellow had filed for bankruptcy, resulting in market share gains for XPO.”
XPO, Inc. (NYSE:XPO) ranks fifth on our list of the best logistics stocks to buy in 2024.