Yesterday, I wrote an article on paper and packaging solutions provider Mondi, a company that has benefited from the e-commerce boom in recent times. Here is another proof of the same phenomenon. Tritax Big Box (LSE: BBOX), the real estate investment trust focused on logistics facilities, just released a positive set of numbers for the first half of 2021.
Tritax reports good earnings
The company’s operating profit was up 19% from the same time last year and its adjusted earnings per share (EPS) grew by 23.6%. The company said this robust earnings growth was due to “development completions, rental growth, and an increase in development management income”. In sum, these indicate healthy economic times for it, despite the still muted economic growth observed so far. Further, it talks about “unprecedented demand” for prime logistics, while the supply has not increased commensurately. It also plans to develop more sites with “100% planning consent success so far”.
In terms of its outlook, it said that it is in “the early stages of a long-term growth cycle in the UK logistics real estate sector”. Specifically it referred to accelerating demand from e-commerce. This ties its story further to the likes of Mondi that have also benefited from growth in the sector. It also expects to continue doing so.
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The question of inflation
Incidentally, like Mondi, it too mentioned cost inflation in its commentary. But in the case of Tritax Big Box, it does not seem grave. A number of other companies, from retailers to airlines, seem to see it as a bigger concern. It chalked these pressures up to supply chain disruptions caused by the pandemic and Brexit.
Still, I am taking note of the companies that have mentioned cost pressures. This is because not everyone believes that they are short term in nature. If higher inflation is here to stay, these early indications can point out the companies that may be most impacted by it over time.
My takeaway for the FTSE 250 stock
Nevertheless, this appears like a small concern in the overall scheme of things for now. Investors are clearly happy with the results. The company’s share price rose on Thursday, making it among the bigger FTSE 250 gainers in yesterday’s trading. Its share price increase over the past year is also pretty impressive at 39%.
As I wrote in the case of Mondi, the company’s share price increase may not be as accelerated in the next few months though. These stocks were in favour over the past year particularly because e-commerce was one of the only booming sectors around. However, with the economy seeing a revival now, I reckon that investor allocation of funds may be far more divided across a range of options.
Over the long term however, this is one of the most promising FTSE 250 stocks for me. I have already bought stocks like Ocado and Deliveroo, and am looking to add more stocks catering to the e-commerce ecosystem now, such as Tritax Big Box.
