Oppenheimer’s Favorite Stocks For Next 12 Months: Top 32 Stock Picks

21. XPO, Inc. (NYSE:XPO)

Share Price Upside: 6%

Number of Hedge Fund Investors In Q2 2024: 37

Average Analyst Share Price Target: $132.19

XPO, Inc. (NYSE:XPO) is a global trucking company with a presence in the US, Canada, France, the UK, and other countries. Its business is geared mostly towards cyclical industries such as eCommerce, food, and retail. This means that XPO, Inc. (NYSE:XPO) benefits from growth in American and other industrial output as it allows the firm to secure more shipment orders. As a result, XPO, Inc. (NYSE:XPO)’s revenue growth has been negligible over the past few years and was flat between 2022 and 2023 as US manufacturing continued to bear the impact of high rates and the post coronavirus era. However, with the Fed now officially on its way to reducing rates, US manufacturing could pick up and allow XPO, Inc. (NYSE:XPO) to benefit from a boom in demand for shipments. Oppenheimer also believes that its European divestiture will serve XPO, Inc. (NYSE:XPO) well as it comments that the firm’s “valuation builds as it ultimately divests its European Transportation business, and evolves its customer service-focused strategy, capacity, and the efficiency of its North American LTL business.”

XPO, Inc. (NYSE:XPO)’s management shared key details for its current and future performance during the Q2 2024 earnings call:

“For July, we estimate tonnage and shipments per day to be about flat year-over-year with both trends outperforming seasonality. On a two-year stack basis, July shipments per day and tonnage per day meaningfully accelerated versus June. Our pricing trends remain strong as we continue to align our pricing with our service quality and premium offerings. For the second quarter, our contract renewal pricing was up year-over-year by 8%. We also delivered another quarter of above market yield growth. We grew yield excluding fuel by 9% compared with the prior year. While our improving weight per shipment was a modest mix headwind to yield, our revenue per shipment ex-fuel increased sequentially for the 6th consecutive quarter and was up 7.4% year-over-year.

We expect to continue increasing both yield and revenue per shipment quarter-over-quarter in the back half of this year, reflecting ongoing momentum with our pricing initiatives.”