Chris’ note: This week, I’ve been spotlighting one of the biggest megatrends our experts here at Legacy Research have been tracking.
We’re calling it America Reborn. It’s all to do with American re-industrialization and reshoring… and the surge of economic growth that will come with it.
So, we turn again today to Teeka Tiwari analyst Andrew Packer.
As he reveals below, the pandemic opened our eyes to the vulnerability of global supply chains. As this boom unfolds, we’ll move away from relying on them… and bring manufacturing jobs back home.
All the new factories and jobs will require a profound improvement in warehouses, roads, rail lines, and ports. We’re looking at a major upgrade to America’s infrastructure… and a chance to profit from the $1.2 trillion buildout.
The backlog was so bad, they refused to take his body…
In 2020, a seaman died aboard an Indonesian cargo ship.
And with the COVID-19 pandemic raging… and the ports shut down…
the body was stuck at sea for 17 months.
It’s a grim reminder of the havok the pandemic played with global supply chains.
Some ships’ captains weren’t patient enough to wait for a spot in a port.
They dumped more than 3,130 cargo containers into the ocean.
Now, the worst of the supply chain crisis is behind us.
According to the Wall Street Journal, cargo shippers have seen demand drop by one-third. Many ships are now sitting idle with empty containers.
This is partly due to the waning of the pandemic. But there’s another, less understand reason these supply chain issues are easing. It’s due to a multitrillion-dollar trend Teeka Tiwari and I have been tracking for our readers.
Today, I’ll show you one way to profit from it…
Made in America Again
That trend is the reshoring of U.S. manufacturing.
Reshoring is returning production and manufacturing back to the company’s home country.
And in America’s case, it means hundreds of thousands of jobs come back to America and a boom in U.S. manufacturing.
Yesterday, I showed how this trend will unleash $1.6 trillion in the U.S. economy. That’s based on four federal laws enacted over the past two years.
Take the Bipartisan Infrastructure Deal, which passed in November 2021.
It allocates $1.2 trillion to build U.S. infrastructure for a new generation of factories and plants.
This will help U.S. companies make more products at home. That way they can bypass any future global shipping disruptions.
Here’s the thing…
These companies will need somewhere to store all the goods they make. So, they’ll need more warehouses to hold their inventories. A lot more…
And that’s where a safe, income-generating opportunity comes in.
You see, demand for warehouses is soaring due to the reshoring trend.
Figures from commercial real estate firm Yardi Matrix show that companies are building about 370 million square feet of new industrial space each year to meet this rising demand. That’s about 1.8 billion square feet through 2026.
That’s roughly seven times the combined floor space of all the Walmart stores in America.
This is a big part of the reshoring story. But it’s one Wall Street hasn’t awakened to – yet.
How to Profit From Surging Warehouse Demand
You see, warehouse vacancies are hovering at about 2–3%.
That lack of space, plus the surge in demand, is great news for warehouse companies as the reshoring trend plays out.
One way to profit is to buy shares in Prologis (PLD).
It owns about 984 million square feet of industrial properties, including warehouses, across 19 countries.
Prologis is a real estate investment trust (REIT). It’s a special kind of company that owns income-producing real estate. And like all other REITs it’s obliged by law to pay at least 90% of its rental income to shareholders.
So, it allows you to become a warehouse landlord through a couple of clicks in your brokerage account.
Prologis has more than 5,000 customers. So, it’s well diversified in its revenue mix.
It has automatic rental increases built into long-term contracts. That means its cash flow will continue to rise no matter what the economy is doing.
And thanks to the shortage in the warehouse space, Prologis has a 3.5% vacancy rate.
Plus, it pays a 2.8% dividend. That’s not a huge yield. But it’s nearly twice as much as the yield on the blue-chip S&P 500 index.
This stock will give you growth and income in the years ahead as the reshoring trend takes off.
Regards,
 |
Andrew Packer
Analyst, Palm Beach Letter