I believe Clipper Logistics (LSE:CLG) is one of the best UK shares to buy now and hold. Here’s why I’d add the shares to my holdings.
E-fulfilment and warehousing sector booming
There has been a rise in demand for warehousing space and e-fulfilment services linked to the rise of e-commerce in recent years. The Covid-19 pandemic exacerbated this need when many traditional shops were closed due to lockdowns and people turned to online shopping.
Clipper is a leading e-fulfilment and warehousing provider based in Leeds, England. Some of its current customer base include retail giants M&S, ASOS, and H&M.
So what’s happening with Clipper shares? Well, as I write, the shares are trading for 863p. At this time last year, the shares were trading for 688p, which is a 25% increase over a 12-month period.
UK shares have risks
Despite my bullish attitude towards Clipper shares, I must note some credible risks of purchasing the shares.
Macroeconomic issues in recent months have pulled many shares back and Clipper is no different. Soaring inflation and the rising cost of raw materials have hampered many stocks. The shortage of HGV drivers specifically could have an impact on Clipper’s operations and performance. This could affect the bottom line, which would affect investor returns and sentiment.
At current levels, Clipper shares are trading close to all-time highs. The shares have bounced back from the stock market correction that affected most UK shares. Clipper shares are on a price-to-earnings ratio of 38, which could be considered expensive too. Any negative news or further issues related to macroeconomic headwinds could cause the shares to fall.
One of the best UK shares to buy
One of the first characteristics I look at when searching for the best shares for me to buy is performance. I can see that Clipper has a consistent track record of performance. I do understand that past performance is not a guarantee of the future, however. Looking back, Clipper has grown revenue and gross profit for the past four years in a row. With its financial year set to end in the coming days, I’m keen to see interim full year-results soon.
Another characteristic I like in UK shares is when they pay a dividend that would boost my passive income stream. Clipper ticks this box also. At present, Clipper’s dividend yield stands at 1.5%. If performance growth continues in the same vein as previously, I would imagine returns and this yield level will continue to grow too. Dividends can be cancelled at any time, however.
Finally, Clipper is operating in a growth sector, in my opinion. It can continue growing as more companies require warehousing and e-fulfilment services due to the changing face of retail and shopping habits.
My verdict
I wish I had acted quicker and picked up the shares for my holdings when the stock market correction occurred and Clipper shares fell. Nevertheless, I would still buy shares at current levels for my holdings. I believe the business will continue its impressive growth and this will provide lucrative returns for my holdings in the long term.
If Clipper shares pulled back once more I would definitely add more shares such is my confidence in the business and the outlook ahead.