Is XPO Logistics a Good Investment?

OVERVIEW

XPO Logistics Incorporation is a company based in the United States. The company offers logistics and supply chain services to customers around the world. The company offers freight transportation services on its fleet of trucks to companies aroun the world. The company also offers logistics services (like warehousing, distribution, management, etc.). The company was founded in 2000.

Why You Should?

  1. XPO Logistics is a great reopening play in an investor’s portfolio. The pandemic reduced the demand for some of the company’s products as people stayed indoors and bought less in general, something that caused a drop in demand for the company’s service. However, once the pandemic is over, the company will continue to grow.
  2. XPO at its core offers logistics services to all kinds of customers around the world. In the long-term, as supply chains become larger and increasingly complicated, XPO Logistics will continue to see rising demand for its logistics and freight transportation business. This long-term growth will also benefit investors in the company.
  3. As the economy reopens, XPO sees extremely high demand for its freight transportation and logistics services as people purchase more products and as the pandemic further complicates the supply chain. This sky-high demand in the short-term will benefit the company’s recovery from the pandemic. This will also benefit investors in the company.
  4. XPO offers a wide range of products and services to its customers around the world. From freight transportation to logistics services and supply chain management services, the company offers services that most companies need. This wide range of products and services has helped the company grow its business and will also benefit investors.

Why You Should Not?

  1. The company faces tough competition in the logistics services and freight transportation industry. Some of these competitors include FedEx, UPS, DHL, Old Dominion Freight Line, and many others. This competition might hurt the company and its investors in the future.
  2. The COVID-19 pandemic reduced the demand for some of the company’s products and also increased costs and complexity for the company’s services. The pandemic reduced the demand for services that were heavily used by the travel and restaurant industry. In addition to this, a shortage of shipping containers and supply chain issues also hurt the company.

MY OPINION

I think that XPO is a decent long-term investment due to its position as a good reopening play, the positive outlook for logistics services, the current high-demand for freight transportation, as well as a wide range of services. However, tough competition and negative impacts from the pandemic might hurt the company and its investors in the future.

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Aaditya Patel

Aaditya Patel

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.