What happened

Shares of XPO Logistics (NYSE:XPO) plunged 25% on Wednesday, and are now off 52% in the last month, as the market braces for a possible U.S. recession. XPO is sure to take a hit from COVID-19 pandemic, and has some nonvirus issues on its plate as well. But this sell-off still feels overdone to me.

So what

XPO Logistics and other transports have been hit hard by the spread of the novel coronavirus, which has brought global economic activity almost to a halt and lowered shipping volumes. But today's sell-off stands out because XPO shares were down on a day when rivals including C.H. Robinson Worldwide (NASDAQ:CHRW), FedEx (NYSE:FDX) and United Parcel Service (NYSE:UPS) were all up.

XPO could actually see a benefit from the pandemic assuming European and U.S. demand for e-commerce related logistics, particularly foods and consumer staples, heats up as people are asked to stay at home.

An XPO-branded truck drives down a coastal highway.

Image source: XPO Logistics.

But investors appear to be growing increasingly worried that the economic ramifications will last well beyond the pandemic. They are homing in on XPO's relatively high $7.54 billion in total debt as they look for reasons to buy or sell stocks heading into a recession. 

XPO has a plan to deal with that debt, announcing in January that it was exploring selling one or more of its business units. Management at the time said it was looking at divestitures because the market was undervaluing XPO. The company's shares are significantly lower since then.

It remains to be seen whether XPO will be able to find buyers for those assets in a volatile market. With so much uncertainty surrounding XPO, investors appear more interested in watching from the sidelines.

Now what

Granted there are questions surrounding XPO, but the company heading into this crisis was performing well despite difficult conditions in 2019. The shares today are lower than they were 18 months ago, when the company was under attack from a short-seller and dealing with the unexpected loss of a major customer.

I understand the uncertainty, but there is no way to justify this valuation. Even if we are heading into a recession, XPO has the wherewithal to pay its bills and drive through the headwinds. It might take time and patience, but now is an attractive moment to give XPO Logistics a look.