Opportunity in Escalating E-commerce Shipping

FedEx (FDX), based in Memphis, Tennessee, provides transportation, e-commerce and business services to businesses and individuals. The company offers domestic and international shipping services for delivery of packages and freight via ground or air transportation. FedEx Office, formerly Kinko’s, provides business services such as printing, copying and sign and banner making to customers and serves the company’s own needs.

FedEx’s purchase of TNT Express, the Netherlands based carrier with operations throughout the world, is benefiting FedEx. The acquisition is providing a pan-European road network that will greatly expand FedEx’s share in Europe’s growing cross-border e-commerce market. Strong e-commerce sales in the U.S. continue to significantly bolster FedEx’s sales and earnings results.

The company will retire 15 aircraft and modernize its fleet. FedEx will buy 50 additional 767-300F aircraft from Boeing. The purchase will upgrade the company’s aircraft fleet and expand its capacity in anticipation of higher growth.

Alan B. Graf Jr., 62, is chief financial officer and executive vice president at FedEx. Mr. Graf has held both positions for 19 years.

At 18.2 times latest 12-month EPS, and with current cash flow exceeding 23.00 per share, FedEx offers investors a great opportunity to participate in the escalating e-commerce shipping segment. The company’s dividend, recently increased, provides a respectable 1.0% yield. Buy.

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