If you are reading this article and looking to invest just $100, then I’m going to guess you are a relatively new investor and/or someone looking to invest a little money in a long-term position in anticipation of stellar returns.
If my guess is right, I think the long-term trends behind contract logistics provider GXO Logistics (GXO -5.69%), electric vehicle (EV) company Tesla (TSLA -10.39%), and copper miner Freeport-McMoRan (FCX -13.03%) make them compelling buys right now. Here’s why.
GXO Logistics combines e-commerce, automation, AI, and analytics
GXO Logistics offers its customers a route to outsourcing their supply chain logistics, specifically e-commerce warehousing. It’s an attractive proposition for three interconnected reasons:
- Outsourcing logistics allows companies to focus time and effort on their core activity.
- The ongoing growth of e-commerce will only increase demand for e-commerce warehousing and lead to new companies deciding to outsource logistics as they build scale.
- The rapid growth of increasingly complex productivity-enhancing technology (automation/robotics, advanced analytics, and smart warehousing) means GXO Logistics can add more value to its solutions for customers.
All these trends aren’t going away anytime soon and make GXO an exciting stock for the long term.
Now is a good time to pick up the stock because it has been heavily sold off following the news that a few customers were rationing their operations. GXO was able to replace the lost revenue, but it naturally takes time to get new contracts to the same level of profitability as mature contracts. In addition, the industry is recovering from a period of overinvestment stimulated by the lockdowns when e-commerce growth exploded.
These headwinds are likely to prove transitory and GXO should move out of this trough in its earnings in 2025. Wall Street analysts forecast GXO’s earnings per share (EPS) to decline from $2.80 in 2024 to $2.48 in 2025 before rising to $2.99 in 2026. The latter figure would put GXO on a price-to-earnings (P/E) ratio of just 13.5 times earnings.
That’s too cheap for a company with such outstanding long-term growth prospects.
Don’t underestimate Tesla
It’s no secret that the automotive market is suffering from relatively high interest rates. High interest rates make financing a car purchase more difficult, which is slowing auto sales, including electric vehicles.
While that’s not good news for Tesla, there are some positives. The slowdown has negatively impacted EV investment among its rivals, and Tesla retains its dominant position in the EV market. Moreover, its scale and first-mover advantage mean it can aggressively lower its cost per car in an industry characterized by high prices for EVs. For reference, its cost per car is now below $35,000, and no one else has Tesla’s profit margins on EVs.
Despite the doom and gloom, Tesla had over a 44% share of the EV market in the U.S., and the best-selling EV in the U.S. (Tesla’s Model Y) is receiving a facelift this year and potentially a low-cost model too, both of which should boost sales.
Best of all, Tesla plans to launch its robotaxi offering, the Tesla Cybercab, this year, with volume production starting in 2026. Alongside full-service driving (FSD), the Cybercab technology could revolutionize transportation and add tremendous value to Tesla’s share price.
To be clear, Tesla is a risky stock. CEO Elon Musk has become a controversial political figure with a lot of critics, and much of the value in the company right now is tied largely to enthusiasm for a product that hasn’t been released yet — the Cybercab. Still, there’s a lot of upside potential for Tesla, and the 36% decline in the share price this year presents a buying opportunity.
Image source: Getty Images.
Freeport-McMoRan and the copper price disconnect
The Chicago Metal Exchange (CME) price of copper is currently at an all-time high, and copper miner Freeport-McMoRan stock is trading 35% below its all-time high. Go figure. The disconnect between the two probably reflects a disbelief that the present price is sustainable and that it’s a consequence of buying in ahead of potential tariffs on copper by President Donald Trump.
Those assumptions may well be accurate, but then again, they may not be.
However, what we do know is that the current administration wants to secure minerals for the U.S. economy, and Freeport-McMoRan has substantive existing mining operations in the U.S. In addition, it has expansion projects that could substantially increase its copper production in the U.S. We also know that Freeport isn’t a significant importer of copper, with its Indonesian production going to Asia and its South American production generally not coming to the U.S.
Simply put, it’s well positioned to thrive in the current environment, and the ongoing demand for copper as a key metal in the electrification-of-everything megatrend makes Freeport-McMoRan a great stock for investors looking to buy and hold a stock for the long term.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends GXO Logistics. The Motley Fool has a disclosure policy.