In this article, we will take a look at the global warehousing industry along with the 7 best warehouse stocks to buy according to analysts.
The Global Warehousing Industry at a Glance
According to a report by IMARC, the global warehousing and storage industry was valued at $505.1 billion in 2023 and is expected to grow to $700.2 billion by 2032, at a compound annual growth rate of 3.5% between 2024 and 2032.
On a regional level, Asia Pacific currently dominates the global market. India’s booming warehousing and logistics sector has been witnessing a strong momentum. As reported by the real estate research and brokerage firm Colliers India, the sector recorded $2.5 billion in inflows in Q2. The industrial and warehousing sector accounted for 61% of total investments with $1.5 billion. As compared to Q2 2023, the institutional investments in the industrial and warehousing segment surged 11 times. The rapidly growing e-commerce and retail consumption in the country are expected to drive the demand for AI-enabled warehouses and micro-fulfillment centers in the next quarters.
Global giants have also looked to expand into India’s warehousing market in an attempt to diversify their supply chains beyond China and leverage the national economic boom and growth potential over the next 15 to 20 years. However, India lags in the warehousing stock with estimates from Avendus Capital stating that China has three times more than India’s 412 million square feet of Grade A warehouses meanwhile the US has 13 billion square feet of warehousing stock.
In light of the current events taking place in the US, a surprising sector that could potentially benefit from the ongoing port strikes is warehousing. This is the event of the first such shutdown in almost 50 years with tens of thousands of dockworkers going on strike indefinitely at ports across much of the country. As analyzed by CNBC’s Diana Olick, warehouses will see more demand and higher pricing power as tenants need workarounds for their goods and containers. An example of this case is the cold storage warehouse firms such as those storing food inventory which are expected to experience increased demand in the case of import disruptions. Warehouse REITs such as Prologis are providing storage areas to temporarily store inventory. However, this is only a short-term win since ports closing for the long term will be a loss for all including warehouses with no goods coming in or out of them. Since the warehouse construction has been low and occupancy rates on warehouses are currently high, the higher pricing power is only valid for the short term.
With that being said, let’s move to the 7 best warehouse stocks to buy according to analysts.
An aerial view of a large warehouse full of food storage containers.
Our Methodology:
In order to compile a list of the 7 best warehouse stocks to buy according to analysts, we first sifted through ETFs and online rankings to gather a preliminary list of 25 such stocks. We then selected the top 7 stocks that had the highest upside potential, according to Wall Street analysts. The best warehouse stocks to buy according to analysts are arranged in ascending order of their average upside potential, as of October 3.
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).
7 Best Warehouse Stocks To Buy According to Analysts
7. Prologis, Inc. (NYSE:PLD)
Average Upside Potential: 11.13%
Number of Hedge Fund Holders: 56
Prologis, Inc. (NYSE:PLD) is a global industrial real estate investment trust that owns and manages space for warehouses, distribution, manufacturing, and large-scale storage. The firm leases modern logistics facilities to 6,700 customers across two categories including business-to-business and retail/online fulfillment. It has built its legacy through the acquisition, development, and maintenance of the largest collection of high-quality logistics real estate globally.
Prologis, Inc. (NYSE:PLD) has emerged as one of the largest warehouse-focused REITs. The company claims that 2.8% of the global GDP flows through its distribution centers globally. Additionally, its irreplicable premier global portfolio makes it stand out. The firm owned or had investments in properties and development projects amounting to nearly 1.2 billion square feet in 19 countries, as of June 30.
The warehouse operator leased 52 million square feet in its portfolio during the second quarter representing a 27% increase over the first quarter and one of its highest quarters in the past years. While the customer demand was subdued, it is improving and is expected to continue improving which is a positive omen for Prologis. The firm also sees its future growth in opportunities in data centers and energy.
Prologis, Inc. (NYSE:PLD) has one of the largest global portfolios of logistics real estate and an industry-leading position. The stock has an average upside potential of 11.13%, as of October 3.
6. DSV A/S (OTC:DSDVF)
Average Upside Potential: 14.20%
Number of Hedge Fund Holders: N/A
DSV A/S (OTC:DSDVF) is a freight forwarder that connects companies with the world and enables smooth and efficient storage and transport of their goods. While the firm started its journey in Denmark in 1976, it has emerged as one of the largest transport and logistics companies in the world. It is divided into 3 divisions namely DSV Road, DSV Air & Sea, and DSV Solutions.
DSV A/S (OTC:DSDVF) is a truly global player with an international network of partners and agents as well as offices in over 80 countries. The firm operates 400 warehouses with a total capacity of over 6 million square metres. The market position is strong with one of the highest market shares among other third-party logistics providers. The firm has recently strengthened its competitiveness by agreeing to acquire Schenker from Deutsche Bahn, a transformative event in DSV’s history that is expected to make it the world’s biggest logistics company.
Regardless of a competitive market, the firm closed Q2 with further market share gains and sequential growth in all three divisions. While the gross profit stabilized in Air & Sea, Road saw a stable gross profit and a 4.4% increase in EBIT before special items. Simultaneously, Solutions witnessed a gross profit increase of 8.1%. Therefore, the company is well set to grow in an ever-changing market despite the challenges. In Q2, the firm also launched a company-wide operational efficiency initiative whose gains will be reaped in the coming quarters.
With resilient segment performance and the status of a leading logistics giant targeting sustainable future growth, DSV A/S (OTC:DSDVF) is in an attractive spot. As of October 3, the average price target for the stock stands at 14.20%.
5. Americold Realty Trust, Inc. (NYSE:COLD)
Average Upside Potential: 17.35%
Number of Hedge Fund Holders: 36
Americold Realty Trust, Inc. (NYSE:COLD) is a global leader in temperature-controlled logistics real estate and value-added services that has been in business for 120 years. The company focuses on the ownership, operation, acquisition, and development of temperature-controlled warehouses. Americold serves food producers, food retailers, and food service providers. The firm is based in Atlanta and has nearly 17,000 associates globally.
Americold Realty Trust, Inc. (NYSE:COLD) has an unmatched network of temperature-controlled supply chain infrastructure. The firm owns or/and operates 239 temperature-controlled warehouses with almost 1.4 billion refrigerated cubic feet of storage across Asia Pacific, Europe, North America, and South America. Furthermore, the strong food industry fundamentals lead to a growing demand for Americold’s business across cycles.
The firm recently recorded another great quarter for organic growth. During the fiscal second quarter, total revenue was $661.0 million, up 1.7% year-over-year, driven by growth within the Global Warehouse segment. Global Warehouse segment same-store NOI increased 17.3% while Global Warehouse same-store services margin increased to 13.2% from 1.1% in Q2 2023.
Americold Realty Trust, Inc. (NYSE:COLD) is well positioned for growth with its integrated network of strategically located warehouses, extensive geographic presence, stable market dynamics, and a flexible balance sheet. The diversification across commodity, geography, and warehouse type also leads to stable cash flows for Americold. The average upside potential for the stock is 17.35%, as of October 3.
4. Deutsche Post AG (OTC:DHLGY)
Average Upside Potential: 17.46%
Number of Hedge Fund Holders: N/A
Deutsche Post AG (OTC:DHLGY), trading as DHL Group, serves as a leading global logistics company. The company has been organized into five operating divisions namely Supply Chain, Express, eCommerce, Global Forwarding, and Post & Parcel Germany. DHL employs approximately 594,000 people in more than 220 countries and territories across the globe.
DHL Group serves as a market leader in logistics with a diversified portfolio. DHL Supply Chain is the world’s leading contract logistics provider with approximately 1600 warehouse locations, nearly 17 million square metres of storage space, and over 50 countries with active operations, as of December 2023. It is in a unique position to cater for the structural growth of e-commerce and omnichannel fulfillment demand across the small, medium, and large customer segments worldwide.
In the year’s second quarter, Group revenue was up slightly, at EUR 20.6 billion as compared to EUR 20.1 billion in the prior-year period. This was regardless of the weak economic environment. CFO of DHL Group Melanie Kreis attributed DHL’s unique logistics portfolio to preparing it well for when global trade would regain momentum. With the new Strategy 2030, the company has planned to grow its revenue by 50% until 2030 compared to 2023, through divisional and dedicated Group growth initiatives.
In conclusion, Deutsche Post AG (OTC:DHLGY) is a global logistics market leader that offers structural GDP+ growth supported by long-term e-commerce and outsourcing trends. Other than having a clear sustainable growth trajectory in mind, DHL also maintains a strong cash flow since it had a FY 2023 free cash flow of more than €3bn. The average upside potential for Deutsche Post AG (OTC:DHLGY) is 17.46%, as of October 3.
3. FedEx Corporation (NYSE:FDX)
Average Upside Potential: 18.01%
Number of Hedge Fund Holders: 59
FedEx Corporation (NYSE:FDX) is an American multinational conglomerate holding company that offers transportation, e-commerce, and business services, with a reach spanning more than 220 countries and territories. The firm has evolved from a single express service in 1973 to a global leader over the years.
The aforementioned broad portfolio of services allows FedEx to meet the needs of its customers, most of whom use services from two or more of its operating companies. FedEx Corporation (NYSE:FDX) has global logistics solutions to help optimize the supply chain. With over 40 million square feet of warehouse space, over 130 warehouse and distribution centers, as well as over 30 omni-channel and fulfillment facilities, FedEx has a lot to offer in terms of warehousing, distribution, and forward logistics.
The fiscal 2025 first quarter remained challenging as the firm made a foundational change to its internal structure to improve efficiency and reduce costs. The demand environment was also a challenge, particularly in U.S. domestic package market. FedEx reported earnings of $3.60 per share on revenue of $21.6 billion, which fell short of analysts’ expectations.
In the fourth quarter of 2023, the company moved into the era one FedEx, a consolidation plan to bring FedEx Ground and FedEx Services into Federal Express Corporation, a single company operating a unified, fully integrated air-ground express network under the FedEx brand. This was complemented by the rollout of Network 2.0, designed to optimize surface operations across the U.S. and Canada. The firm’s DRIVE program also remains on track to deliver $4 billion of savings compared to the fiscal 2023 baseline.
With a robust strategy to deliver long-term profitable growth through reducing costs and building on synergies between services, investors can potentially consider FedEx Corporation (NYSE:FDX). As of October 3, the stock has an average upside potential of 18.01%.
2. Lineage, Inc. (NASDAQ:LINE)
Average Upside Potential: 21.84%
Number of Hedge Fund Holders: N/A
Lineage, Inc. (NASDAQ:LINE) operates as the largest global temperature-controlled warehouse REIT. The company offers a diversified suite of warehousing solutions including cold storage warehousing, port-centric warehousing, automated warehousing, built-to-suit warehousing, and sustainable warehousing. Lineage partners with food and beverage companies to help make the cold chain more reliable and sustainable.
Lineage, Inc. (NASDAQ:LINE) clearly leads the industry with its network of more than 480 strategically located facilities totaling over 84 million square feet and nearly 3 billion cubic feet of capacity across Asia-Pacific, Europe, and North America. With a large scale and network benefits spread across geographies, customers and commodities, the firm has positioned itself as a global leader in a fragmented industry. Lineage has built one of the largest standalone global cold storage companies from a single warehouse in just over a decade. Thus, the firm has a proven expansion and development track record with a robust pipeline.
Considering the fact that cold storage is a large, growing, and recession-resistant market, the future of Lineage seems bright. The firm can capitalize on favorable long-term trends the market has to offer. These include a more than 60% increase in food production which will be required to feed 1.9 billion more people by 2050 while the frozen food market is also expected to grow over the next few years. An increased reliance on cold storage is another industry dynamic in the firm’s favor.
In conclusion, Lineage, Inc. (NASDAQ:LINE) has a market-leading position with a portfolio of modern assets positioned in some of the most strategic locations globally, something which is extremely hard to replicate. Analysts hold a consensus Buy rating on the stock and their 1-year median price target points to a 21.84% upside from the current stock price.
1. GXO Logistics, Inc. (NYSE:GXO)
Average Upside Potential: 39.44%
Number of Hedge Fund Holders: 29
GXO Logistics, Inc. (NYSE:GXO) is a dominant contract logistics company with a presence in 27 countries. The company designs and operates the most technologically advanced logistics solutions in the world. It serves a range of industries including aerospace, agribusiness, e-commerce, healthcare, and the public sector among others. The firm is headquartered in Greenwich, Connecticut.
The company serves as a global leader in providing cutting-edge logistics solutions for multinational companies and blue-chip market leaders. With approximately 200 million square feet of warehouse space and 970 warehouse locations, the numbers for the firm represent a strong market position. GXO delivers an outsized growth driven by secular tailwinds including e-commerce, outsourcing, and automation. With leadership in technology and automation combined with a sound financial profile, the GXO difference is evident.
The second quarter proved to be promising for GXO Logistics, Inc. (NYSE:GXO). The firm witnessed record revenue of $2.8 billion, up 19% year-over-year, with organic revenue growth of 2%. Simultaneously, the company is set to sign a record amount of new business in 2024 and signed new business wins of approximately $270 million in annualized revenue during the quarter. A strong consumer demand in the UK and European markets and the momentum in business are positive signs for the firm.
A global scale, tech and automation leadership, structural organic growth, and resilient margins make GXO Logistics, Inc. (NYSE:GXO) an attractive warehouse stock to invest in. As of October 3, the average upside potential for the stock is 39.44%.
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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