FedEx Corporation (FDX) has rallied back to its 50-day moving average on a decent pop in volume, after the transport giant disappointed on guidance in its March earnings call.
We added to FDX in the low $90’s and are thinking about buying more if the stock should re-test the 200 day moving average just under $95.
With Japan recovering, and Europe now thought to be somewhat stable, FDX is a play on the global return of growth, which still seems like a long way away, but by the time we see it, that growth is already in the international large-cap industrial names like FDX.
Transports broke out to an all-time high on Monday, with the SP 500 action, so the tailwinds are starting to line-up for FDX.
Current consensus EPS estimates of $6 for fiscal 2013 and $7.50 for 2014 mean FDX is trading 16(x) and 13(x) forward estimates for 25% expected growth in 2014, which could still be a pipe dream, given that FDX is telling investors that clients are trading down to lower-cost freight options, particularly in the international market.
FDX is still up 8.5% year-to-date in 2013, despite cautious comments and guidance in the March earnings call.
It is tough finding oversold stocks on this market, with the SP 500 making new all-time highs each day, but keep an eye on FDX. FDX’s all-time high print was $120 in June, 2006.
A return of decent global growth, should see the stock take out that key level.
(long FDX)
Trinity Asset Management, Inc. by:
Brian Gilmartin, CFA
Portfolio manager