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The Safest Warehouse Stocks to Store Your Money

Investing is all about balancing risk with potential reward. Those who want to lower risk as much as possible can do so by investing in warehouse stocks.
The post The Safest Warehouse Stocks to Store Your Money appeared first on Investment U.

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Investing is all about balancing your risk with your potential reward. Some investors love buying stocks that have incredible potential. They want to find companies with tons of room to grow. This usually leads to outsized returns. However, there are downsides to these types of stocks. If these companies don’t meet investors’ expectations, the stock price can plummet. This means that they are very high risk. On the other hand, some investors want to lower their risk as much as possible. They can do this by investing in stable industries, such as warehouse stocks. There are tons of safe industries that should still produce a decent return.

Since the COVID-19 pandemic, the commercial real estate industry has undergone some extreme changes. Before jumping into the best warehouse stocks to buy, let’s examine the state of the overall commercial real estate market.

The State of Commercial Real Estate

In commercial real estate, there are four main categories. These categories are office space, industrial, multi-family rentals and retail. Industrial real estate is what we are going to focus on in this article. The COVID-19 pandemic impacted all of these categories in very different ways. However, CBRE, the largest commercial real estate company in the United States, has a few predictions for 2022.

According to CBRE, the industrial sector has been doing incredibly well since the pandemic. This is because COVID-19 created a massive need for eCommerce. People weren’t allowed to leave the house so they needed to buy things online. Companies like Amazon needed a lot more warehouses to meet the growing demand. This made industrial real estate incredibly valuable. CBRE states that third-party logistics operators are beginning to dominate the sector.

Additionally, COVID-19 has created a wide range of supply chain issues. Just about every single company had challenges with its supply chain in 2021. Due to this, many companies are rethinking how they manage their supply chains. This will also likely lead to an increased need for industrial real estate.

Warehouse Stocks to Buy

The future certainly looks bright for warehouse stocks. With that said, let’s take a look at four of the best warehouse stocks to buy.

NOTE: I’m not a financial advisor and am just offering my own research and commentary. Please do your own due diligence before making any investment decisions.

Prologis (NYSE: PLD)

Prologis is a real estate investment trust (REIT). A REIT is a company that owns and operates real estate. It then earns a profit from leasing its buildings. In total, Prologis owns 4,675 buildings. This equates to 994 million square feet around the world. When finding tenants to lease to, it focuses on two main categories: business-to-business and retail/online fulfillment. It also leases to some of the world’s top logistics companies. This includes Amazon, FedEx and UPS.

One thing to note is that, in Q3 2021, Prologis’ occupancy rate was 96.6%. This is unprecedented in the industry. It means that 96.6% of Prologis’ buildings were rented out. CEO Hamid R. Moghadam stated that “space in our market is effectively sold out.” Due to this, CFO Thomas Ollinger believes that Prologis’ earnings potential is unrivaled. He also believes that the positive outcome of this occupancy rate won’t even be noticeable for 18+ months.

In 2020, Prologis posted a record year. It reported $4.74 billion in revenue as well as a net income of $1.48 billion. More recently, in Q3 2021, it posted revenue of $1.27 billion and a net income of $723.54 million. Despite its success in 2020, these Q3 2021 numbers were up 10.21% and 139% respectively.

Prologis stock was up approximately 60% in 2021. It is also up 193% over the past five years. On top of this strong performance, Prologis is also a good candidate for dividend investors. Right now, Prologis pays a dividend of 1.65%. It has a history of increasing this dividend over time. Since 2018, Prologis has a dividend CAGR of 10%. This beats the industry standard by 2%.

FedEx Corporation (NYSE: FDX)

FedEx is one of the world’s largest logistics and transportation companies. According to Transport Topics, FedEx owned 110 warehouses in 2020. This equates to 30.7 million square feet of warehouse space. It also makes FedEx one of the top warehouse stocks to buy.

In FY Q3 2021, FedEx reported $23.47 billion in revenue as well as $1.04 billion in net income. This revenue was an increase of 14% year-over-year (YOY) while net income was down 14%. During the most recent earnings report, FedEx CEO, Frederick Smith highlighted the company’s resiliency. In Q3 2021, FedEx had to overcome a challenging labor market, higher transportation costs, and higher wages. Since FedEx has 477,000 employees, these are not small expenses. Despite this, there was only a mild decrease in net income from Q2.

If you are looking for a safe company to invest money with then FedEx is a great option. It’s also a good candidate for dividend investors. It currently has a dividend yield of 1.14%.

FedEx stock was up 7% in 2021 and is up 41% over the past five years.

Ryder Systems Inc (NYSE: R)

Ryder Systems is one of the world’s leading logistics and transportation companies. According to Transport Topics, Ryder had 328 warehouses in 2020. This equates to 56.4 million square feet of warehouse space. Ryder also boats a fleet of 235,000 commercial vehicles.

As I stated, eCommerce has been a growing trend in commercial real estate for years. However, it was greatly accelerated due to the COVID-19 pandemic. Ryder is doing its best to capitalize on this trend by making strategic acquisitions. Most recently, it acquired Whiplash, a provider of omnichannel fulfillment and logistics services. This acquisition will help Ryder expand its e-fulfillment network. By acquiring Whiplash, Ryder improved its technology and absorbed a new portfolio of clients. In total, Whiplash had 250 clients and 19 warehouses.

Ryder also recently purchased Midwest Warehouse & Distribution System. This acquisition adds an additional 17 warehouses to Ryder’s arsenal. With these two acquisitions, Ryder is now capable of delivering anywhere in the U.S. within two days. It can deliver to 60% of the U.S. within one day.

In Q3 2021, Ryder reported revenue of $2.46 billion and a net income of $138.05 million. It also currently pays a dividend of 2.97%.

Ryder System’s stock was up 16% in 2021 and is up 1.35% over the past five years.

Warehouse Stock ETFs

When it comes to finding warehouse stocks, it’s a little difficult to narrow them down. For example, there are logistics companies like FedEx and UPS that own warehouses. There are also commercial real estate companies whose entire business is owning warehouses. Last, there are companies like Amazon. Amazon is an eCommerce company but it is also one of the biggest owners of warehouses in the United States.

Due to the number of different types of warehouse stocks, it might be a good idea to consider an exchange-traded fund (ETF). It’s fairly easy to find different types of real estate ETFs. This helps you diversify your portfolio because an industrial real estate ETF owns lots of different warehouse stocks. There are a few different ETFs that you can choose from. However, one good place to start is with the Pacer Benchmark Industrial Real Estate ETF.

I hope that you’ve found this article valuable when it comes to finding the safest warehouse stocks to store your money. As usual, please base all investment decisions on your own due diligence and risk tolerance.

The post The Safest Warehouse Stocks to Store Your Money appeared first on Investment U.

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Economics

Taylor Wimpey share price up 3% as housebuilder promises to return more cash to investors

The Taylor Wimpey share price has risen by 3.3% today, reversing some of the…
The post Taylor Wimpey share price up 3% as housebuilder promises to return more cash to investors first appeared on Trading and Investment News.

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The Taylor Wimpey share price has risen by 3.3% today, reversing some of the losses taken over a bad start to the year that has seen the housebuilder’s valuation decline by over 10%, after the company today promised investors it would return more cash to them over coming months. The windfall comes as a result of what Taylor Wimpey described as an “excellent” 2021.

Demand for larger properties, especially houses with gardens, has leapt as a result of the pandemic. As well families spending more time at home desiring more space, buyers were further encouraged to take the leap by the stamp duty holiday that ran from 2020 until late last year, offering savings of up to £15,000. Rock bottom interest rates and fierce competition between providers also led to cheaper mortgages which helped maximise selling prices.

taylor wimpey plc

The combination of favourable headwinds means the homebuilder expects to now realise an operating profit of £820 million for 2021 from the sale of a little under 14,000 homes. That represents a growth of 47% in the number of new-built properties delivered compared to 2020, when construction work and administrative processes were delayed by Covid-19 disruption.

As a result, Taylor Wimpey finished last year with a bank balance of £837 million. It will now, it says, see how much cash is left once it has paid out its dividend and planned for expenses over the rest of the year. Any “excess cash” surplus will be returned to shareholders, most likely through a major share buyback. The company will confirm details alongside its full-year results, due to be reported in March.

Taylor Wimpey is worth around £6 billion and is a member of the FTSE 100. It has existed in its present format since 2007 when created out of a merger between the housebuilders George Wimpey and Taylor Woodrow. The deal was legendarily struck by current chief executive Pete Redfern at a service station on the M40.

Despite sector concerns over how much it will cost to replace dangerous cladding used on buildings over the past 20 years and now banned as a result of the Grenfell Tower scandal, Taylor Wimpey has repeatedly stated it is confident the £165 million it has set aside to cover related expenses will suffice. It has been challenged on the sum but still considers it a “reasonable estimate”.

If the cladding provision does prove sufficient, that should leave plenty of cash for redistribution to investors through a major share buyback over 2022.

The post Taylor Wimpey share price up 3% as housebuilder promises to return more cash to investors first appeared on Trading and Investment News.

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Stocks

VIDEO — Eric Nuttall: Oil in Multi-year Bull Market, Supply Crisis Coming

Eric Nuttall: Oil in Multi-year Bull Market, Supply Crisis Coming

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Supply and demand fundamentals show oil is in a multi-year bull market with a supply crisis in the works.That’s according to Eric Nuttall, partner and senior portfolio manager…

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Eric Nuttall: Oil in Multi-year Bull Market, Supply Crisis Coming youtu.be

Supply and demand fundamentals show oil is in a multi-year bull market with a supply crisis in the works.

That's according to Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners. He manages the firm's Ninepoint Energy Fund, which he said was the best-performing energy fund of 2021.

"The risk/reward for me in the sector is incredible," he told the Investing News Network in an interview. "My biggest challenge is everything looks good — large caps look good, small caps look good. Oil looks good, natural gas looks good. Services look good, offshore drilling looks good — everything looks good."


Nuttall said supply-side factors are key for oil right now, and explained that there are three main baskets to keep in mind: US shale, the Organization of the Petroleum Exporting Countries (OPEC) and the rest of the world.

Looking at 2022, he said US shale is no longer experiencing hypergrowth, meaning that production will grow, but will no longer exceed global demand growth. Meanwhile, OPEC is getting close to using up its spare capacity.

"By the end of this year I believe we will exhaust OPEC's spare capacity, and that will be the most bullish catalyst for oil in easily the last decade," Nuttall said during the conversation.

The "rest of the world" category includes major oil producers like Shell (NYSE:RDS.A,LSE:RDSB) and BP (NYSE:BP,LSE:BP), which Nuttall said have invested insufficiently in new production since 2014, and as a result will effectively post no growth until the end of the decade.

In terms of what that means for prices, Nuttall said it's tough to give a 2022 forecast due to variables like COVID-19, but he thinks oil will be "well in excess" of US$80 per barrel this year, with a shot at making it to US$100. Looking out further, he sees a new all-time high of US$140 to US$150 in the cards for oil.

"I feel very confident that we're in a multi-year bull market for oil. Energy stocks, despite the run, still in my opinion represent a generational opportunity due solely to energy ignorance — people frankly are clueless in terms of how oil is used and how long it's going to take to displace," he explained.

"We will all be consuming oil for the rest of our lifetimes, and yet that fear of peak demand is leading to a reality of peak supply. The writing is on the wall: We're heading towards an oil supply crisis."

Don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Graphite Outlook 2022: Demand from Battery Segment to Remain High

Click here to read the previous graphite outlook. Graphite is an essential raw material used in electric vehicle (EV) batteries, and as sales of EVs grow, market watchers believe demand for the metal will surge. Despite discussions about battery chemistry

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Click here to read the previous graphite outlook.

Graphite is an essential raw material used in electric vehicle (EV) batteries, and as sales of EVs grow, market watchers believe demand for the metal will surge.

Despite discussions about battery chemistry changes, many experts think graphite will remain a dominant element in EV batteries for at least the next decade. Both synthetic graphite and natural graphite, in the form of the intermediate product spherical graphite, are used in the anodes of lithium-ion batteries.

Here the Investing News Network (INN) looks at the key trends in the graphite market in 2021 and what the graphite outlook is for 2022.


Graphite trends 2021: Shipping and power cost challenges


After a tumultuous 2020 in which supply chains were put to the test as economies shut down due to the coronavirus pandemic, graphite kicked off 2021 on a bright note.

In early 2021, prices for natural flake graphite were slightly higher than expected as a result of unexpectedly strict environmental investigations and closures in China, Suzanne Shaw of Wood Mackenzie told INN back in July.

“There was also considerable shipping disruption early on in the year with containers and vessels not where they should be as routes reopened post-COVID,” she said. “Limited availability was prioritized for higher-value cargos, with lower-value raw materials flows disrupted. This situation subsided through Q2.”

Pricing was relatively flat during the first six months of 2021, according to Benchmark Mineral Intelligence data.

“Prices for +100 mesh flake concentrate, across all purities, have moved upward by around 5 to 10 percent year-to-date, while pricing for all other grades has moved less than 5 percent so far this year due to continued structural oversupply in the graphite market,” Miller told INN at the end of H1. “Moreover, the global shipping situation at the moment is hindering upward price pressure.”

Prices took a turn in August, jumping on the back of the energy crisis, which hit producers and disrupted output. Battery grades were particularly hit by rising power costs as both the manufacture of synthetic graphite and the processing of spherical graphite from natural flake are known for their high levels of energy consumption.

In terms of supply, Chinese production was expected to ramp up to meet rising domestic battery demand, as there is still a lot of overcapacity in China.

“However, the overall trend is that China is showing less appetite on the raw material side and investing in higher-value downstream industries rather than exploration/mining across most mineral sectors,” Shaw said at the end of H1. “It will continue to increase its own imports of flake graphite.”

Meanwhile, on the synthetic graphite front, the market could be driven into a deficit as a result of increasing demand from the lithium-ion battery and downstream EV sectors worldwide, Roskill, which was acquired by Wood Mackenzie, reported back in August.

“From a performance perspective, EV automakers prefer synthetic graphite, citing its superior fast charge turnaround and battery longevity,” a November Fastmarkets report reads. “Synthetic graphite, however, is costly, power intensive and environmentally unfriendly, with supply centered in China at odds with North American and European automakers’ desire for more localized supply.”

Graphite outlook 2022: What’s ahead


At the end of last year, analysts were expecting demand from the battery segment to continue to grow on the back of increased EV sales, with growth opportunities for both synthetic and natural graphite.

According to Benchmark Mineral Intelligence data, demand for natural graphite from the battery segment amounted to 400,000 tonnes in 2021, with that number expected to scale up to 3 million tonnes by 2030. Meanwhile, demand for synthetic graphite reached about 300,000 tonnes in 2021 and it’s expected to increase to 1.5 million tonnes by 2030.

“We do expect recycling to plug some of these gaps, but this isn't really likely to reach the necessary scale until post 2030,” Miller said in a December webinar. “So at the moment, the focus is really on synthesizing and mining this material as quickly as possible to meet the demand that we might see into the future.”

By volume, graphite is one of the most important elements in any electric vehicle battery ― there is between 50 and 100 kilograms of graphite, whether synthetic or natural, present within each vehicle.

“We can really see the sector growing progressively to around 15 times the demand we see today by 2030, outpacing moderate growth and demand from industrial applications,” Miller said.

That said, it's important to note that only certain types of natural graphite supply are relevant to and able to be qualified for the lithium-ion supply chain.

“This is really the biggest challenge in using natural graphite as a battery input,” Miller said. “This has the potential to exclude further capacity from projects in development.”

The expert explained that if all planned supply reached the market, it would have the potential to balance out demand up to 2029 to 2030, but with these limitations on which material can be qualified, the story takes a different direction.

“The primary limitation here is the mesh size inputs for the battery supply chain must be fine to medium flake,” Miller said, adding that consistency and high purity, somewhere around 94 to 95 percent carbon, is also key. “Flake graphite for the lithium ion supply chain must have low levels of impurity in order to avoid compromising the quality and longevity of the end product.”

According to Benchmark Mineral Intelligence, today, synthetic graphite anodes make up the majority of market share and approximately 57 percent of the anode market.

“Going forward, we do expect this to shift in the direction of natural graphite anodes to around a 50-50 balance for a multitude of reasons,” Miller said. His reasons include tight graphitization capacity, higher costs for synthetic graphite anode material and also the environmental shortcomings of the synthetic graphite supply chain at the moment.

Graphitization is the process of producing synthetic graphite from carbon-rich, oil-derived feedstock raw materials, and this process is energy intensive.

“In China, graphitization capacity has been mainly located in Inner Mongolia, a province which has some of the lowest energy costs in the country and where other high-energy metal producers, such as ferro-chrome smelters, are based,” Fastmarket reports. “But Inner Mongolia was the first in the firing line when the 2021 energy crisis unfolded.”

This resulted in reduced production and unpredictable cost increases for synthetic graphite, and the reason why many battery manufacturers in China could turn to natural graphite instead.

Looking ahead at how overall demand for graphite will perform, Benchmark Mineral Intelligence expects the battery segment to challenge industrial applications as the leading end-market for graphite demand. Over the next decade, anode demand will grow at an average of 27 percent compound annual growth rate (CAGR).

“Unlike some of the other critical mineral markets, there is still time for both the natural and synthetic graphite market deficits to be redressed — so long as adequate funding is provided for junior miners in the near term,” Miller said.

Commenting on price performance, Fastmarkets maintains the view that both flake and spherical graphite prices will trend stable to higher in the near term.

“The only potential reprieve we see for graphite prices would be if the power constraints diminish EV lithium-ion battery production, and in turn reduce demand for graphite anodes sufficiently to stem the upward pressure on graphite prices,” analysts said.

Another key trend for graphite investors to watch in the new year is how western automakers keep up with China, which has become the dominant player in all steps of the anode supply chain.

Interestingly, before 2021 came to an end, US-based Tesla (NASDAQ:TSLA) made a move to secure graphite supply from top graphite producer Syrah Resources (ASX:SYR).

The ASX-listed company will process graphite from its Balama mine in Mozambique in its Louisiana plant, and will supply the EV maker with anode graphite material for an initial four year period. Tesla also has an option to offtake additional volume subject to Syrah expanding its capacity beyond 10,000 tonnes per year.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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