By Tursun Alkau
The logistics and transportation sector has no shortage of niche activities that offer tremendous potential, and moving services is one of them. These companies assist individuals and businesses in relocating their goods and belongings in a secure and cost-effective manner, and as the U.S. continues to recover from the Covid-19 pandemic it’s increasingly a nation on the move.
Moving Services Sector: Sustainable Long-Term Growth
The growth potential for the U.S. moving services market between 2022 and 2027 is estimated to be substantial, growing at a compound annual growth rate (CAGR) of 3.68%, which translates to an increase of approximately $3.92 billion, according to Technavio.
These are the factors that are contributing to market growth:
Higher demand for mobility: Moving services is a significant industry in the U.S., driven by a large population with high mobility. Americans are known for frequently relocating for jobs, family, or lifestyle reasons. This creates a consistent demand for moving services.
Diverse customer base: The market caters to a wide range of customers, including individuals, families, businesses, and government agencies. This diversity offers multiple revenue streams and helps buffer against market fluctuations that might affect one segment but not others.
Resilience to economic fluctuations: While the moving services industry may face some impact during economic downturns, it tends to be more resilient than other sectors. People and businesses continue to move locally and across the country, even in less favorable economic conditions, ensuring a baseline level of demand.
Predictable regulatory environment: While there are regulations governing the moving services industry, they are generally stable and well-understood, reducing the risk of sudden regulatory challenges that could impact business operations.
Demographic trends: Factors such as an aging population (leading to downsizing or moving to retirement communities) and the growing trend towards remote work (which allows more flexibility in terms of living location) can drive demand for moving services.
Overall, these above-mentioned factors will ensure steady growth for years to come.
2 Stocks To Buy
Among publicly traded companies, these two large-cap stocks have the highest exposure to the moving services industry:
FedEx (FDX): The company offers residential and business freight delivery services that are also used for moving. Combined with growth in other areas like e-commerce and express delivery, FedEx is an attractive option for investors interested in the moving services and broader logistics sector.
Estimates by Investing.com imply a +9% upside in the next 12 months in a base-case scenario. Analysts are mostly positive about the prospects of FDX stock, with 18 “buy” recommendations versus 13 “neutral”.
In terms of stock performance, FDX went up +50% throughout 2023, making it one of the year’s best-performing stocks in the logistics industry. The massive growth of FedEx shouldn’t be too surprising given it’s a well-known and trusted brand in the logistics industry, thanks in large part to customer loyalty and consistent business expansion.
United Parcel Service (UPS): the company offers moving and packing services for households through its subsidiary, the UPS Store. Besides being active in the moving services sector, UPS is proactively adjusting to market trends by making strategic acquisitions in healthcare logistics and e-commerce return solutions.
Estimates by Investing.com imply a +6.65% upside in the next 12 months in a base-case scenario. Analysts are generally positive about the prospects of the UPS stock, with 15 “buy” recommendations, versus 15 “neutral” and 2 “sell” recommendations.
In terms of stock performance, UPS is clearly a beaten-down stock with a -11% year-to-date decline in share price. The company has encountered greater challenges compared to its competitor FedEx, owing to the loss of 1.2 million shipments amid labor union negotiations. However, given the company’s long-term financial stability and recent strategic acquisitions, I believe it’s still a worthwhile stock for long-term investors.
About the authorTursun Alkau is a part-time investor who has actively traded stocks and options for more than six years. He is the founder of MyProMovers, one of the top moving companies in Washington D.C. in 2023, according to Forbes. MyProMovers serves 4,000 customers a year, including diplomatic missions, U.S. military bases, White House personnel, and luxury brands.
