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5 Stocks to Gain as E-commerce Boosts Demand for Logistics

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The logistics industry had to initially bear the brunt of the COVID-19 outbreak last year as lockdowns were imposed across the globe to curb the spread of the virus. However, e-commerce remained in a bright spot within the retail segment when brick-and-mortar stores were shut. People resorted to online shopping from the comforts of their homes and this in turn, allowed the logistics industry to get back on its feet, despite the supply chain challenges posed by the pandemic. With various safety protocols put in place to protect the health of its employees, logistics companies reorganized their operations and handled the delivery of goods to consumers. In fact, market research provider Ti stated that the global e-commerce logistics market grew 27.3% in 2020, as mentioned in a Reuters Events article.

However, even as vaccination drives pick up across major economies, leading to gradual reopening, the dominance that e-commerce has garnered over the years is set to sustain, owing to the many conveniences it provides to consumers. Notably, Research and Markets stated in a report that the global e-commerce market is estimated to witness a CAGR of 22.9% from 2020 to 2027, driven by factors like the increasing penetration of the Internet as well as the rising usage of smartphones, as mentioned in a GlobeNewswire article.

This should also have a positive impact on the logistics industry since a further increase in online shopping will mean that e-commerce companies will have to depend more on logistics to deliver those goods to consumers. Markedly, a report by Expert Market Research stated that the global logistics market is estimated to see a CAGR of 5% from 2021 to 2026. In fact, the report also highlighted the importance of online shopping as it stated that substantial growth in the e-commerce industry is driving the global logistics market.

Moreover, the report mentioned that reverse logistics has witnessed increased demand due to e-commerce, which should augur well for logistics companies. This is because e-commerce platforms offer return policies to their customers for reasons like any damage done to their ordered goods while shipping or if they have received a wrong product.

5 Stocks to Invest in Now

The global logistics market looks set for growth in the future, thanks to the rising demand for e-commerce which doesn’t look ready to ebb even as economies gradually open up, thanks to the conveniences it provides. Hence, this seems like an opportune moment to invest in companies with strong fundamentals that can make the most of this upswing. Notably, we have handpicked five such stocks that carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Covenant Logistics Group, Inc. (CVLG - Free Report) , together with its subsidiaries, provides transportation and logistics services in the United States, and serves transportation companies and traditional truckload customers, including manufacturers, retailers, and food and beverage shippers. The Zacks Consensus Estimate for its current-year earnings increased 27.1% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

Atlas Air Worldwide Holdings, Inc. (AAWW - Free Report) , through its subsidiaries, provides outsourced aircraft and aviation operating services. The company also serves express delivery providers, e-commerce retailers, and airlines. The Zacks Consensus Estimate for its current-year earnings increased 55.9% over the past 60 days. The company’s expected earnings growth rate for the next quarter is 2.5%.

Expeditors International of Washington, Inc. (EXPD - Free Report) provides logistics services and the company’s multi-channel order fulfillment services include retail and store fulfillment, e-commerce, among others. The Zacks Consensus Estimate for its current-year earnings increased 21.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 25.3%.

Matson, Inc. (MATX - Free Report) , together with its subsidiaries, provides ocean transportation and logistics services and it primarily transports dry containers of mixed commodities, livestock, seafood, general sustenance cargo, garments, footwear, e-commerce, and other retail merchandise, and so on. The Zacks Consensus Estimate for its current-year earnings increased 46.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 80.6%.

XPO Logistics, Inc. (XPO - Free Report) provides supply chain solutions and its logistics segment provides a range of contract logistics services, including value-added warehousing and distribution, e-commerce and omnichannel fulfillment, and cold-chain logistics. The Zacks Consensus Estimate for its current-year earnings increased 17.4% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

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