Supply chain issues dominated headlines over the last year because of disruptions from the pandemic. Supply problems trickled down, impacting business's profits, harming industries and affecting consumer demand. What are the best supply chain-related stocks to look at right now? Read on to learn more about Benzinga's recommendations for your investment portfolio.
Quick Look at the Best Supply Chain-Related Stocks:
Supply Chain Stocks to Watch out for This Year
Take a look at which stocks made the list.
United Parcel Service Inc. (NYSE: UPS)
The e-commerce market benefited from COVID-19 from increased orders that necessitated parcel carriers such as UPS to deliver goods to consumers. UPS manages handling of supply chain goods.
UPS made significant changes to the company after current CEO Carol Tomé took over in June 2020. Strategic shifts such as a focus on small package deliveries and the sale of its freight business have helped the company pull ahead of competitors.
FedEx Corp. (NYSE: FDX)
FedEx focuses on the transportation of goods as well as providing services and e-commerce. It has a strong presence in the sector with a market cap of $65.11 billion and is a crucial player in delivering in-demand goods.
However, its share price was relatively unmoved during 2021 despite its reported improved earnings for 2022 of up to $23.5 billion.
Union Pacific Corp. (NYSE: UNP)
Union Pacific operates North America’s premier railroad franchise, covering 23 states. It is the second-largest railroad business in the United States. Its freight transport means it moves cargo through multiple modes of transportation such as trains and ships.
Because of the excess demand during shortages, it could be that Union Pacific’s model benefits from the increased volume of orders, expanding demand to its railroads.
Skyworks Solutions Inc. (NASDAQ: SWKS)
Skyworks is a semiconductor company, an integral part of the supply chain. It designs and manufactures semiconductor system solutions for mobile devices.
Customers of Skyworks include Apple Inc. (NASDAQ: AAPL), Amazon.com Inc. (NASDAQ: AMZN), Microsoft Corp. (NASDAQ: MSFT), Bose and others. COVID-19 expanded the already robust demand for tech goods.
Intel Corp. (NASDAQ: INTC)
Intel is the world's largest semiconductor chip manufacturer in terms of revenue. Technology products are heavily in demand. Intel is the developer of the x86 series of microprocessors, which is found in most personal computers.
The company recently announced it is spending $20 billion on a chipmaking hub in Ohio, expected to be operational by 2025.
Overview: Supply Chain-Related Stocks
Supply chain-related stocks operate in various markets and provide services and products in other sectors. The market includes producers, vendors, warehouses, retailers and transportation companies, including the best supply chain-related stocks.
Stocks such as Intel and Skyworks provide product development and manufacturing to some of the world’s largest firms. In comparison, companies such as FedEx and UPS manage the shipping and transportation of goods. As a result, all play an integral role in the process, from producing goods to meeting the customer's logistical demands.
Supply chain problems have been apparent since 2021, and experts project the squeeze to last another two years. The sector has demonstrated signs of easing recently but still suffers from global problems such as higher prices, delayed deliveries and empty shelves. Some companies have benefited from the excess demand from customers.
How to Buy Supply Chain-Related Stocks
Once you have found the best supply chain-related stocks you are interested in buying, the next steps involve finding a way to obtain the shares. Here are the steps to buying stocks.
Find a brokerage.
A broker acts as the intermediary between you and the stock exchange. Place your order with your broker by telling the brokerage — usually via an online order — to buy the number of shares you request at the price you set.
The broker may charge a fee for its services. Research costs and other aspects before setting up an account.
Decide how many shares you want to buy.
Once you have chosen a broker, fund your account and decide how many shares to buy. Take into account the amount of risk you want to take and the percentage of your account attributed to the best supply chain-related stocks.
Choose your order type.
This stage requires you to decide how your position is executed. Different order types exist, but the primary two you need to know are market orders and limit orders.
Market orders mean you acquire the shares at a price dictated by the market. Using market orders results in a high chance your order will be filled, but it may be at a higher price than you were expecting.
Limit orders mean that the price you buy the stock at is decided by you. You can determine what price you buy the shares at, but you face the risk that the order won’t be filled if the price doesn’t hit your predetermined level.
Buy the shares.
After you have completed all the necessary steps to put you in a position to buy the shares, the last thing to do is click buy. Once completed, you can monitor the stock and your other positions by navigating to the correct tab on your brokerage platform.
Best Online Brokers for Supply Chain-Related Stocks
You can find the best supply chain-related stocks in the table below.
Features to Look for in the Best Supply-Chain-Related Stocks
- Supply Issues: When looking for features in these stocks, it is important to see how they were impacted by the issues from last year. Many stocks navigated the pandemic well, cementing their reliability.
- Location: Transportation and delivery stocks are affected by their geographical location and proximity to customers.
Pros and Cons of the Best Supply-Chain-Related Stocks
UPS: UPS benefited from the pandemic-related shift to online orders. Earnings per share beat analysts' predictions to reach $3.06, and revenue jumped for the company. However, the stock's share price failed to make further gains since a high in May 2021.
FedEx: If individuals are now accustomed to shopping online, then stocks like FedEx should experience tremendous growth. Further, partnerships with Microsoft could help grow the stock. FedEx recently announced a multi-year collaboration to transform commerce, supply chains and logistics. On the other hand, the omicron variant of COVID-19 has caused shortages for FedEx’s staff and delayed shipments, which have impacted its business lately.
Union Pacific: Union Pacific recently announced a quarterly dividend increase of 10% to $1.18 per share, making the stock an attractive investment. Furthermore, the stock has received upgrades to its price target from RBC Capital owned by Royal Bank of Canada (NYSE: RY), Cowen Inc. (NASDAQ: COWN) and Goldman Sachs Group (NYSE: GS).
Skyworks: Blayne Curtis, an analyst at Barclays (NYSE: BCS), lowered the price target on Skyworks recently, stating that although he sees positive numbers for the semiconductor company, he questions "just how much upside is left as cyclicality still looms for many names."
Intel: Intel is one of the largest companies in its field. The prospects for the semiconductor industry are huge with technological developments and the rise of electric vehicles. However, despite demand for its product, the stock has struggled to make substantial gains over the last three years.
Are Supply Chain-Related Stocks a Good Investment Right now?
Supply chain-related stocks and the problems in that sector have been among the most talked-about topics for the last twelve months. This circumstance presents both good and bad opportunities for these stocks. Certain companies, such as the ones listed above, represent potentially excellent investment opportunities as they can benefit from increased demand, especially as supply chain problems are resolved. In addition, with these stocks being heavily discussed, now might be a good time for investment.
Biggest Supply Chain-Related Stock Movers of the Day
You can view the biggest movers of supply chain-related stocks for the day below.
|BHR||Braemar Hotels & Resorts||$2.27||2.94%||338.9K||Buy/Sell|
|JLL||Jones Lang LaSalle||$164.85||1.95%||376.3K||Buy/Sell|
|AIT||Applied Industrial Techs||$164.44||-0.19%||238.5K||Buy/Sell|
Will Supply Chain Problems Last?
Supply chains keep the economy running, allowing the supply of products, services and transportation to flow unencumbered. However, when supply chain problems occur, issues can trickle down into other areas of the economy.
The bright side is that lockdowns and restrictions are lessening, and the workforce is getting back to normal. It is unlikely these problems will remain for the long term, so supply should be able to keep up with demand.
Frequently Asked Questions
What are supply chain related stocks?
Supply chain related stocks are shares in companies that are involved with the supply chain.
Are supply chain related stocks a good investment?
As the U.S. continues to rely on the supply chain, supply chain related stocks are likely a great investment.
What are the best supply chain related stocks?
See Benzinga’s list of recommended supply chain related stocks in the above article.