Perhaps no sector is thought to be as boring as logistics. Yet, in today's post-pandemic world, logistics is now one of the most exciting sectors for investors, explains growth stock expert Tony Daltorio, editor of Market Mavens.
That's why I'm bringing to your attention the world's largest pure-play contract logistics provider, GXO Logistics (GXO), which owns about 900 warehouses in 25 countries.
GXO was spun off last August from trucking company XPO Logistics (XPO). And before you think the spin-off is just a company that owns warehouses, I want to let you in on a little secret: GXO is a technology company, too.
Let me fill you in on the massive three-pronged opportunity for growth that lies ahead for GXO Logistics. First, there is e-commerce. Globally, e-commerce penetration of overall sales is only about 20%. Obviously, that leaves a lot of room for expansion.
Next, we have outsourcing. Only about 30% of logistics operations are outsourced to firms like GXO. Companies still keep the other 70% in house. But with the all the problems in the global supply chain over the past two years, we'll see a lot more company outsourcing logistics.
Finally, there is factory automation. Warehouse automation penetration is a mere 5%. That leaves a lot of territory for GXO to fill with its warehouse automation technology.
GXO's technology runs the gamut from automated storage and retrieval systems to emerging technologies such as mobile goods-to-person robotics, collaborative robotics, and three-dimensional robotic storage solutions.
As the world's largest contract logistics provider, GXO is benefiting from scale and its ability to serve multinational corporations that need a logistics partner that can offer high-tech automated solutions.
The company has a mere 5% of the outsourced logistics market, even though it is the world's largest pure-play contract logistics provider. And keep in mind that outsourcing is growing. Currently, it accounts for just a third of the $430 billion market for logistics in Europe and North America, according to Jefferies.
Bottom line: there is lots of growth ahead for GXO, which has not yet been priced by Wall Street. GXO Logistics stock is a buy at any price up to the $80s.
