Clipper Logistics (LSE:CLG) emerged from the 2020 market crash as one of the biggest winners. Demand for its services increased exponentially. Despite a recent share price dip and macroeconomic pressures, I’d still rate it as one of my best stocks to buy now and hold.
Warehousing and fulfilment
Clipper is a warehousing and e-fulfilment provider. It counts retail powerhouses such as ASOS, H&M, and M&S amongst its customer base. The changing face of retail, exacerbated by the pandemic, has led to a rise in demand for logistics services.
As I write, Clipper shares are trading for 710p. At this time last year, the shares were trading for 572p, which is a 24% return over a 12-month period. When the stock market crashed in 2020, shares dipped to as low as 149p. Based on current levels, that’s a 376% return since mid-2020.
The best stocks to buy now have risks too
The Clipper Logistics share price has fallen in the past couple of months. Rising inflation has led to an increase in the cost of raw materials. More importantly, the supply chain crisis as well as the shortage of HGV drivers here in the UK has placed pressure on logistics companies such as Clipper. Although I don’t envisage this to be a longer-term issue, short- to medium-term performance could be affected.
At current levels, Clipper shares could be considered a bit expensive. The shares currently sport a price-to-earnings ratio of close to 34. If performance were to be affected or any other negative news were to affect Clipper, it could cause the shares to fall further.
Why I like Clipper shares
Most of my best stocks to buy now have a good track record of performance. I do understand that past performance is not a guarantee of any future performance, however. Looking back, I can see Clipper’s revenue and operating profit have increased for the past four years. Coming up to date, interim results released in December made for good reading, in my opinion. Clipper reported revenue, profit, and cash generation all increased compared to the same period last year.
Clipper’s performance growth has led to dividend payments. It currently sports a yield of just over 1.5%. The majority of my best stocks to buy now make me a passive income through dividend payments. I do understand dividends are not guaranteed and can be cancelled, however. In its interim results, it declared a dividend of 4.5p per share.
Clipper has grown to become one of the best logistics firms in the UK and has an excellent customer base with long-standing contracts. It is actively seeking new business to grow too. I believe the market for logistics, warehousing, and e-fulfilment is a growth market. I would expect Clipper to continue to benefit from this burgeoning demand and continue to grow performance, in turn increasing any returns I hope to gain.
Overall, I’d add Clipper shares to my portfolio. There was a chance that Clipper could have seen a short-term boost due to the pandemic and dropped off once restrictions eased. It seems to have continued to grow. With the changing face of retail and shopping habits, I think its growth will continue. It is still on my best stocks to buy now list and I can’t see that changing for the foreseeable future.
Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Clipper Logistics. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
This post was originally published on Motley Fool
