DXP Enterprises (NASDAQ: DXPE) Positioned For Reshoring

As we near the 2024 presidential election, promises are being made for a more prosperous economy to fix what appears to be faltering. Much of the pressure stateside is the result of challenging commodity prices, selective consumer spending, and potential deflationary pricing pressures. One of the common themes amongst advisors is the big rotation into smallcaps as rates decline. Despite being an oversimplification of a broader economic phenomenon, this general theme will likely push share prices north for companies that fall into this category.

One of the areas of interest is industrials. Though this isn’t exactly where the action is given the “everything AI” mania, key subsectors may experience an uplift as manufacturing is reshored. One of the big economic initiatives presented by Trump is for a 15% corporate tax rate for companies that reshore manufacturing. If the stars align and this comes to fruition, the US may push through reindustrialization 2.0 and create a more robust and potentially automated economy.

Though lower corporate taxes and tariffs on imports don’t play well with the US’s trading partners, these may have the ability to support domestic economic activity and further grow the economy. Manufacturing currently only contributes around 11% of total GDP stateside whereas services contribute 77%. Though unpopular with some economists, tariffs may create a level playing field for domestic manufacturing, making domestic manufacturing more cost-competitive.

This week we will review DXP Enterprises (NASDAQ: DXPE), a company that specializes in maintenance, repair, and operating products in the US. The firm caters to a variety of industries with energy being the largest sector catered to. With a number of megatrends coming into play throughout the next decade, DXP is well-positioned to benefit as a tier-1 distributor. Pairing this with its supply chain management capabilities and industrial products, DXP, like CRH, will experience an uplift as productivity is bolstered in the US.

DXP Enterprises (NASDAQ: DXPE)