The onshoring trend in the US is gaining momentum, with industrial cities like Detroit experiencing population growth for the first time in decades. The latest round of tariff wars is expected to further drive companies to relocate to America. Investors can capitalize on this trend by focusing on “pick-and-shovel” stocks, which are companies that provide essential services to manufacturers.
One area to consider for investment is Industrial REITs, such as Prologis (PLD), the largest warehouse owner in the country. While the stock may appear pricey based on traditional measures, there are signs that it is actually undervalued. PLD boasts a strong occupancy rate and continues to see growth in its core funds-from-operations forecast. Additionally, the stock offers an attractive dividend yield of 3.5%, making it a compelling income play for investors.
Railways are also set to benefit from the onshoring trend, with companies like Union Pacific (UNP) and CSX Corp. (CSX) positioned as key players in the industry. UNP, in particular, has seen a decline in shipping activity due to high rates but is expected to bounce back as rates decrease. The company’s dividend growth has stalled in recent years, providing an opportunity for investors to capitalize on potential upside.
Similarly, CSX has experienced revenue declines, but this is attributed to factors such as lower fuel surcharges and export coal prices. With volumes actually increasing, the company is expected to see growth as rates decline. CSX’s dividend has grown significantly over the past five years, offering investors the potential for further appreciation. The stock’s current yield and operating efficiency make it an attractive option for dividend investors.
Overall, investors looking to capitalize on the onshoring trend in the US have a range of opportunities to consider. From Industrial REITs like Prologis to railway companies like Union Pacific and CSX Corp., there are several cheap stocks with strong dividend potential. By focusing on companies that provide essential services to manufacturers and infrastructure for shipping, investors can position themselves to benefit from the growth of Industrial Revolution II in America.
