4 Under the Radar Logistics Stocks to Consider Adding to Your Portfolio
A greater reliance on deliveries for essential and non-essential goods, a rise in international trade-related agreements, and advancement in transport...
A greater reliance on deliveries for essential and non-essential goods, a rise in international trade-related agreements, and advancement in transportation applications have been driving the logistics services industry's growth. Therefore, we believe fundamentally sound logistics stocks Forward Air (FWRD), Echo Global Logistics (ECHO), Covenant Logistics (CVLG), and Radiant Logistics (RLGT) are well-positioned to benefit. Let’s discuss.
The COVID-19 pandemic severely impacted the logistics industry due to unprecedented supply chain disruptions and factory closures. But with the rapid rollout of vaccines and an uptick in distribution activities as supply chains began to recover slowly, the logistics market has righted itself and is able to meet the massive spike in demand. In addition, because stay-at-home consumers have warmed to purchasing electronics, home appliances, and essential goods through e-commerce websites, online delivery services have gotten a boost.
The logistics market is expected to reach $77.28 billion by 2025, registering a 2% CAGR. Furthermore, increasing international trade agreements, growing inbound and outbound transportation, and efficient inventory management are expected to propel the demand for the industry’s services.
Thus, we think it could be wise to bet now on prominent Logistics stocks Forward Air Corporation (FWRD), Echo Global Logistics, Inc. (ECHO), Covenant Logistics Group, Inc. (CVLG), and Radiant Logistics, Inc. (RLGT). These names are expected to deliver substantial returns in the near term based on their solid growth potential and diverse portfolios.
Forward Air Corporation (FWRD)
FWRD in Greeneville, Tenn., offers ground transportation services, including expedited linehaul (TL & LTL), pickup and delivery, intermodal drayage, and specialized temperature-controlled logistics services. The company operates through two segments: Expedited Freight; and Intermodal.
In July, FWRD expanded its expedited less-than-truckload (LTL) service in Vancouver, BC. Through this expansion, the company should improve its freight clearance procedures and reduce the transmit time for the customers. The company can also transfer through Seattle and support regional businesses with pickup and delivery services.
FWRD’s total operating revenue increased 49.3% year-over-year to $420.67 million in the second quarter, ended June 30, 2021. The company’s net income grew 232.5% from its year-ago value to $30.68 million. Its EPS rose 236.4% from the prior-year quarter to $1.11. Also, the company’s cash and cash equivalents grew 26.3% from $40.25 million as of December 31, 2020, to $50.84 million as of June 30, 2021.
Analysts expect FWRD’s revenue to increase 29% year-over-year to $1.64 billion in its fiscal year 2021. Also, the company has an impressive earnings surprising history; it surpassed the consensus EPS estimates in three of the trailing four quarters. In addition, its EPS is expected to increase 365.5% in the current year. Moreover, the stock has gained 12.9% in price over the past nine months and 53.3% over the past year.
FWRD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Momentum and Growth. We’ve also graded FWRD for Sentiment, Stability, Value, and Quality. Click here to access all FWRD’s ratings. FWRD is ranked #8 of 16 stocks in the A-rated Air Freight & Shipping Services industry.
Echo Global Logistics, Inc. (ECHO)
ECHO provides simplified transportation management, from coast to coast, dock to dock, and across all major transportation modes. The Chicago-based company utilizes the technology platform to compile and analyze data from its multi-modal network of transportation providers for transportation and logistics needs. Its multimodal shipping services include Truckload, LTL, Intermodal, International Air & Ocean, and Small Parcel.
This month, ECHO entered a definitive agreement to be acquired by a global equity firm, The Jordan Company, L.P. (TJC), for approximately $1.3 billion. ECHO should expand its supply chain capabilities through this transaction, including all the automation planned to enable the digital freight marketplace.
For the second quarter ended June 30, 2021, ECHO’s revenue increased 81.6% year-over-year to $934.5 million. The company’s income from operations grew 778.6% from its year-ago value to $24.6 million. Its net income rose 1,740% from the prior-year quarter to $18.4 million. Also, the company’s EPS increased 1,625% year-over-year to $0.69.
ECHO’s revenue is expected to increase 39.6% year-over-year to $3.51 billion in its fiscal year 2021. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Moreover, its EPS is expected to increase by 107.5% in the current year. Over the past nine months, the stock has soared 72.2% in price. Also, the stock has returned 86.7% over the past year.
ECHO’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The stock has an A grade for Growth, and a B for Value and Momentum.
In addition to the POWR Rating grades I’ve just highlighted, one can see ECHO’s ratings for Quality, Sentiment, and Stability here. ECHO is ranked #9 of 23 stocks in the A-rated Trucking Freight industry.
Covenant Logistics Group, Inc. (CVLG)
Through a portfolio of logistics and transportation solutions, CVLG provides value-driven supply chains to help customers get products to where they are needed in a quick, cost-effective, and seamless way. The company operates through four segments: Expedited; Dedicated; Managed Freight; and Warehousing.
Last month, CVLG commenced a modified Dutch Auction tender offer to purchase up to $40 million of its Class A common stock. This move could boost its long-term growth, strengthened by its continued execution of the strategic plan and consistently balanced approach to capital allocation.
CVLG’s total revenue increased 33.7% year-over-year to $256.32 million in the second quarter, ended June 30, 2021. The company’s operating income came in at $18.33 million, compared to a $28.95 million operating loss in the prior-year period. In addition, its net income amounted to $15.42 million, compared to a $22.34 million net loss in the second quarter of 2020. Also, the company’s EPS came in at $0.91, compared to a $1.31 loss per share in the prior-year quarter.
For its fiscal year 2021, analysts expect CVLG’s revenue to increase 19.5% year-over-year to $1 billion. It has surpassed the consensus EPS estimates in three of the trailing four quarters. The company’s EPS is estimated to increase 225.9% in the current year. The stock has gained 77.8% in price over the past nine months and 76.2% over the past year.
It’s no surprise that CVLG has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Growth, and a B for Value and Momentum.
Click here to see the additional POWR Ratings for CVLG (Quality, Stability, and Sentiment). In the same industry, CVLG is ranked #3.
Radiant Logistics, Inc. (RLGT)
Incorporated in 2005, RLGT is a non-asset-based transportation and supply chain management company. It offers domestic and international air and ocean freight forwarding services as well as freight brokerage services. The company also provides multimodal transportation and logistics services mainly to the U.S. and Canada. RLGT is based in Bellevue, Wash.
In June, RLGT appointed Kristin Toth Smith to its board of directors. Smith, with her experience in transportation and logistics, should help the company to strengthen its e-commerce and last-mile service offerings.
During its fiscal fourth quarter, ended June 30, 2021, RLGT’s income from operations increased 25% year-over-year to $9.72 million. The company’s net income grew 81.2% from its year-ago value to $11.28 million. Its EPS rose 133.3% from the prior-year quarter to $0.21. In addition, the company’s revenue amounted to $257.91 million during this period.
Analysts expect RLGT’s revenue to increase 7.8% year-over-year to $958.7 million in its fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. RLGT’s EPS is expected to increase by 4.8% next year. Furthermore, the stock has gained 12.7% over the past nine months and 27.8% over the past year.
RLGT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Sentiment, and a B grade for Value.
We’ve also graded RLGT for Momentum, Stability, Growth, and Quality. Click here to access all RLGT’s ratings. In the Air Freight & Shipping Services industry, RLGT is ranked #6.
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FWRD shares were trading at $86.01 per share on Thursday morning, up $0.44 (+0.51%). Year-to-date, FWRD has gained 12.73%, versus a 19.60% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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