2. GXO Logistics, Inc. (NYSE:GXO)
Average Analyst Price Target Upside as of September 20: 35.90%
PE Ratio (FWD) as of September 20: 18.54
Number of Hedge Fund Holders: 29
GXO Logistics, Inc. (NYSE:GXO) has positioned itself as a major player in the global logistics sector, which offers a range of services that include warehousing, distribution, order fulfillment, e-commerce solutions, and reverse logistics. It is among cheap transportation stocks to buy according to analysts.
Since its establishment as a spin-off from XPO Logistics in August 2021, the company has emerged as the largest pure-play contract logistics company in the world. This not only allows it to focus on its core logistics operations but also provides a pathway for growth through acquisitions in a vast and fragmented industry.
One of the company’s key strengths lies in its advanced technology integration. Currently, over 30% of its warehouses are equipped with cutting-edge technology, which improves efficiency and service quality.
With approximately 970 facilities covering nearly 200 million square feet globally, the company operates on behalf of companies that prefer to outsource their logistics functions. It identifies several key growth trends shaping the logistics landscape. It sees an increasing trend toward outsourcing as businesses concentrate on their core operations. The rise of e-commerce which demands expanded warehousing solutions is another growth area. Lastly, the growing emphasis on supply chain resilience in response to shifting global trade patterns is another growth trend that it focuses on.
In the second quarter, GXO Logistics (NYSE:GXO) reported a remarkable 19% increase in revenue. It was largely fueled by the acquisition of Wincanton, which significantly expanded its presence in the U.K. and enhanced its capabilities in critical sectors like aerospace and defense. The acquisition added more than 200 facilities to the company’s portfolio, further strengthening its operational footprint.
In the same quarter, the company secured $270 million in new business wins in annualized revenue, which shows a strong demand for its services. Furthermore, it is exploring the future of logistics through innovative technologies. For instance, it has introduced a humanoid robot in its warehouses as part of a pilot program in collaboration with Apptronik. The robot is capable of carrying 55 pounds and performing tasks like picking and packing.
In September, GXO Logistics (NYSE:GXO) took another step forward by announcing an agreement with Reflex Robotics to pilot its humanoid solutions for live operations. This second Robots-as-a-Service (RaaS) agreement showcases the company’s ambition to improve efficiency and productivity through cutting-edge robotics that can quickly adapt and learn from human interactions.
15 analysts have covered GXO Logistics (NYSE:GXO) and given it a consensus Buy rating. The average price target of $70.00 implies an upside of 35.90% to the stock’s last price, as of September 20.
Mar Vista Investment Partners, LLC stated the following regarding GXO Logistics, Inc. (NYSE:GXO) in its first quarter 2024 investor letter:
“GXO Logistics, Inc. (NYSE:GXO) experienced a setback this quarter. Customer volumes dropped 9%, stalling any organic growth. This slump was primarily driven by weakness in the omnichannel retail and consumer packaging sectors. As a result, the company’s 2024 forecasts fell short of analyst expectations, leading to a drop in share price after the announcement.
Despite cyclical headwinds, there are signs of a turnaround for GXO. Management indicated that customer volumes in January have already begun to improve. Additionally, they expect easier comparisons in the later half of 2024 to further aid recovery. To us, this suggests that the first half of 2024 may be the cyclical low point, with a rebound on the horizon. Over the next few quarters, GXO should get back on track towards achieving its long-term financial goals.”
