The supply chain is the system that moves goods, services, and raw materials throughout the world. Supply chain stocks include transportation companies (such as railroads, trucking companies, and shippers), delivery companies, and freight companies. They also include logistics companies, supply chain software businesses, and services companies.
Global supply chains have come under severe pressure in recent years. Factors contributing to supply chain issues have included:
- Trade tariffs.
- Geopolitical tensions, such as conflicts in Ukraine and the Middle East, are spilling over into trade disruptions.
These pressures have led to negative revisions to earnings estimates, higher prices, and fears of a recession.
For decades, increasingly interconnected and interlinked global supply chains have operated under "just in time" principles. Under this strategy, materials and products are moved "just" before they are used or sold, leaving the supply chain susceptible to sudden shocks.
Five supply chain stocks to watch in 2025
As a result of supply chain disruptions, investors are naturally looking to buy stock in companies poised to help corporations deal with related challenges. The stocks listed below are ways to invest in the supply chain theme.
1. UPS
NYSE: UPS
Key Data Points
Package delivery giant UPS (UPS -0.89%) is a key player in the logistics and supply chain industry. Both UPS and FedEx (FDX -0.44%) have faced challenges in recent years, as the COVID-19 pandemic-inspired surge in deliveries led to a significant increase in industry capacity.
A combination of slowing economic growth and a natural correction in consumer behavior (a return to spending on travel and services rather than on products) hurt volume growth, putting pressure on margins. Additionally, the Trump administration's tariffs are creating considerable uncertainty among UPS's customer base.
UPS is addressing these issues while focusing on expanding in targeted markets such as healthcare and small and medium-sized businesses (SMBs). At the same time, UPS is deliberately reducing its low- or negative-margin Amazon (AMZN -1.84%) deliveries to focus on higher-margin deliveries within its network.
It may take some time, but UPS should recover as volumes eventually improve and the industry adjusts its capacity to meet demand.
2. CSX
3. Old Dominion Freight Line
NASDAQ: ODFL
Key Data Points
4. Trimble
5. Manhattan Associates
NASDAQ: MANH
Key Data Points
Manhattan Associates (MANH -1.71%) produces software used to manage the supply chain and inventory for the retail, wholesale, distribution, and manufacturing end markets.
Retailers are increasingly selling through various channels, whether in-store, online, by phone, or other means -- a move encouraged by the lockdowns imposed in response to the COVID-19 pandemic. It's a trend likely to continue into the foreseeable future as the share of retail coming from online sources is likely to increase.
As a result, supply chain management is becoming more complex for retailers and logistics operations in distribution centers and warehouses. All of this plays to Manhattan's strength. The company's long-term growth prospects appear excellent, with Wall Street analysts forecasting double-digit revenue growth for the foreseeable future.
Pros and cons of investing in supply chain stocks
- Technology is driving improvements in logistics productivity and the need for specialized providers.
- Recent events have underscored the importance of supply chain resilience and the need for more flexible supply chains.
- Supply chain companies are highly dependent on their customers' spending patterns, which often depend on highly cyclical factors.
- Supply chain companies can suffer if their customers' long-term prospects are in decline.
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How to invest in supply chain stocks
1. Open your brokerage app: Log in to your brokerage account where you handle your investments.
2. Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
3. Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
4. Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
5. Submit your order: Confirm the details and submit your buy order.
6. Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
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