Sometimes, shipping companies get lost in the conversation, but these businesses are essential, and shipping stocks can add an element of diversification to your portfolio. If the U.S. Federal Reserve and other central banks implement accommodative monetary policies in the coming months, this could boost global economies and benefit freight and logistics companies.
Investors in the U.S. will certainly recognize well-known shippers like FedEx (FDX) and United Parcel Service (UPS). However, you can also geographically diversify your portfolio with share positions in ZIM Integrated Shipping Services (ZIM) and A.P. Moller-Maersk (AMKBY) (DE:DP4H). I am bullish on these stocks, so let’s see what these best-in-class shipping companies might deliver to discerning investors in 2024 and beyond.
FedEx (NYSE:FDX)
Not long ago, Tropical Storm Debby was upgraded to a Category 1 hurricane, wreaking havoc on the southeastern U.S. While Debby certainly slowed down supply chains, and package-delivery company FedEx activated contingency plans to minimize the impact, the company will surely return to full service sooner or later.
Indeed, FedEx is a resilient company that delivered a Street beat in the fourth quarter of Fiscal Year 2024. Specifically, FedEx’s earnings came in at $5.41 per share, which surpassed the consensus estimate of $5.34 per share. Furthermore, FedEx generated revenue of $22.1 billion, edging out the consensus forecast of $22.076 billion.
Not long ago, Robert W. Baird analyst Garrett Holland reiterated his Buy rating on FedEx stock and hiked his price target on the shares from $325 to $340. Holland views FedEx favorably based on the company’s “consistency in execution, improving profitability, and prudent capital allocation.” So, there’s probably plenty of gas in the tank for FDX stock, and this could be an ideal time to add it to your watch list.
What Is the Price Target for FDX Stock?
According to TipRanks’ analyst rating consensus, FDX is a Moderate Buy, based on 13 Buys and five Hold ratings in the past three months. The average FedEx stock price target is $322.53, implying 16% upside potential.
United Parcel Service (NYSE:UPS)
United Parcel Service, which I will abbreviate as UPS, is a package-delivery specialist that rivals FedEx. Checking the chart, we can see that UPS is at its lowest price in several years.
I won’t try to hide the ugly facts about UPS. In the second quarter of 2024, UPS generated revenue of $21.8 billion, falling short of the analysts’ consensus call for $22.18 billion. Moreover, the company earned $1.79 per share in Q2 versus Wall Street’s consensus estimate of $1.99 per share. However, this was UPS’s first quarterly EPS miss in a long time, and even great companies will fall short from time to time.
Besides, it wasn’t all bad news for UPS. According to UPS CEO Carol Tome, Q2 “was a significant turning point for our company as we returned to volume growth in the U.S., the first time in nine quarters.” UPS’s current volume momentum could result in a positive surprise when the company reports its third-quarter results. Thus, if you like to buy when sentiment is down, take a close look at UPS stock.
What Is the Price Target for UPS Stock?
According to TipRanks’ analyst rating consensus, UPS is a Moderate Buy, based on nine Buys, eight Holds, and one Sell rating in the past three months. The average United Parcel Service stock price target is $159.17, implying 29.1% upside potential.
ZIM Integrated Shipping Services (NYSE:ZIM)
ZIM Integrated Shipping Services, which I will abbreviate as ZIM, is an Israel-based global container liner shipping company that’s been around since 1945. It’s a shipping giant that some U.S. investors aren’t aware of but ought to pay close attention to.
Despite political unrest throughout the year, ZIM managed to flip to profitability in 2024’s first quarter. Notably, ZIM reported net income of $92 million versus a net loss of $58 million in the first quarter of 2023. Plus, the company achieved adjusted EBITDA of $427 million, up 14% year-over-year, as well as $1.56 billion in revenue, also up 14%.
ZIM CEO Eli Glickman celebrated the company’s “solid first quarter results” and “positive momentum,” but ZIM faces an upcoming test. In particular, ZIM will release its second-quarter 2024 financial results on August 19, and Wall Street analysts expect to see earnings of $1.92 per share. If ZIM can maintain its “positive momentum,” there could be a share-price rally in store, so today’s a great day to conduct your due diligence on ZIM stock.
What Is the Price Target for ZIM Stock?
ZIM stock comes in as a Moderate Sell based on one Buy and three Sell ratings. The average ZIM Integrated Shipping Services stock price target is $14.18, implying 23.35% downside potential.
A.P. Moller-Maersk (OTC:AMKBY)
A.P. Moller-Maersk is a Dutch container shipping company. It has been dealing with rebel attacks that have been causing disruptions in the Red Sea. Route congestion and longer shipping times will, unfortunately, impact supply chains and, more specifically, A.P. Moller-Maersk’s workflow.
However, container demand is still robust, and A.P. Moller-Maersk expects the global container-shipping market to grow by 4% to 6% in 2024, up from the company’s previous guidance of 2.5% to 4.5% growth. In addition, A.P. Moller-Maersk anticipates 2024 EBITDA of $9 billion to $11 billion this year versus the company’s previous prediction of $7 billion to $9 billion.
On top of all that, A.P. Moller-Maersk raised its full-year free cash flow (FCF) outlook to at least $2 billion, up from the company’s previous forecast of at least $1 billion. Also, A.P. Moller-Maersk just disclosed second-quarter 2024 earnings of $0.26 per share, a slight beat when compared to the analysts’ consensus estimate of $0.25 per share. Therefore, even while supply chains are disrupted, A.P. Moller-Maersk is on a steady course, and AMKBY stock deserves your attention today.
What Is the Price Target for AMKBY Stock?
On TipRanks, AMKBY is a Moderate Buy based on one Buy and two Hold ratings in the past three months. The average A.P. Moller-Maersk stock price target is €1,862.70, implying 35.9% upside potential from the current price of €1,371 on the German exchange.
The Takeaway: Set a Course for Success with Shipping Stocks
Of course, you don’t have to go all in and load the boat on FedEx, United Parcel Service, ZIM Integrated Shipping Services, and A.P. Moller-Maersk shares. These are just picks for you to research and possibly put on your list of important picks for 2024.
Yet, these are all highly-established shipping businesses with notable positive points. Hence, as a patient investor with an optimistic outlook for the global freight and logistics market, I would consider each of these four shipping stock picks for possible small share positions.
