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 from online sources is expected 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 high-single-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 greater flexibility.
- Supply chain companies are highly dependent on their customers' spending patterns, which are often driven by cyclical factors.
- Supply chain companies can suffer if their customers' long-term prospects are in decline.
What to consider before investing in supply chain stocks
Given the new era of protectionism and the fracturing of global trade patterns, investors must always consider the impacts on the global supply chain and the pressures it faces from evolving trade policies.
The tariffs imposed on certain countries (notably China) have led to significant supply chain shifts, putting pressure on existing trading relationships. UPS' small and medium-sized business customers are having to shift to alternative suppliers, which is affecting delivery volumes. Whether U.S. trade policies are upheld in court remains to be seen, but their effects have been significant.
How to invest in supply chain stocks
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- 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.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Future outlook for supply chain stocks
The future outlook is normalization. Following the tumultuous years of lockdowns, supply chain crises, supply chain spending ramps (and then retractions, notably in e-commerce facilities), and impacts to global trade from tariffs and protectionist actions, the supply chain market is definitely looking to normalize in 2026.
One example includes UPS customers shifting suppliers in response to tariffs imposed on imported products from countries such as China. UPS hopes its customers will pick up delivery volumes through 2026 as they adjust their supplier relationships.
Another example is a contract logistics company, GXO (GXO -0.52%), which is back on a mid-single-digit growth path after it lost customers in 2023-2024 after a previous boom in investment during the COVID-19 lockdowns. The key to investing in the sector is understanding how normalization will play out and how it will affect profit growth for the stock you are looking to invest in.
