Growth-oriented investors tend to focus on tech stocks, and with good reason. Some of the biggest names in tech have been overachievers in recent years, delivering substantial returns.
But you can find high-growth companies outside of tech. On this clip from Motley Fool Live, recorded on May 6, Fool.com contributor Lou Whiteman identifies XPO Logistics (XPO 1.11%) as a market beater and explains why he believes that outperformance will continue in the years to come.
Lou Whiteman: XPO Logistics, one of my favorite companies to talk about, and I'm going to convince you why that is. Earlier this week, first-quarter earnings, oy, did they "deliver." See what I did there? The company earned $1.46 per share, $0.50 above the $0.97 consensus, and that consensus was way up because I don't know if you've noticed, but with the pandemic, delivery companies, shipment companies have done really well. They raised full-year guidance too. This is a company, an old economy company, that now expects 2021 adjusted EBITDA to be up more than 30% over 2020. On a per-share basis, the low end of their guidance is $0.40 above the consensus estimate, even with raised expectations they are killing it right now.
So what's going on? First, XPO spends about $500 million annually on tech and it seems to be paying off. XPO Connect is a product that's almost like Match Group (MTCH 2.60%) for truckers which, I don't know. [LAUGHTER] If you imagine, you have a lot of truckers who try to avoid not having a full truck whenever they're on the road. You have a lot of shippers that are looking to get things from point A to point B using technology to bring them together. This is a very sticky offering. Truck brokerage revenue was up 83% year over year. They are also investing in automation and warehousing, which is leading to faster fulfillment times, better efficiency. This is a well-run company.
Secondly, as I mentioned, we had a pandemic. We were doing a lot of e-commerce, subsequent need from delivery capacity. What's going on behind the scenes is that the pandemic accelerated this trend on the corporate side of looking to outsource warehousing and outsource logistics due to its complexity and because of the vulnerabilities in the system. XPO is a huge player here. Their scale, their automation, it allows them to manage these tasks cheaper than their customers can on their own. The company has brought in more than $4 billion in new customer agreements so far in 2021. One of their new customers, you might have heard of a company called Apple (AAPL 0.43%), who is partnering with XPO to build a new distribution center in Indiana.
I know, still, this is just a logistics company and that bores people and I get that and we'll see if I can share my screen here, because this is why you should care. Tell me if this comes up. This is a 10-year chart comparing XPO's performance with Amazon (AMZN -0.53%), Netflix (NFLX 0.76%), Apple, and Microsoft (MSFT 0.17%). It's done pretty darn well. There are special companies all over the stock market. Not every logistics company does this, but it's not just a tech thing to get an over-performance. XPO is one of the special stories, special companies, there's a lot to like from here. They are actually splitting off this logistics and e-commerce business from the trucking company. It's going to be a pure-play for all the growth. For all of the boring old industrial that this looks like, I'd argue we're in the early stages of a huge opportunity here, and XPO is the best way to play it. Everyone should have this on their radar screen.