FedEx: In-sync with the U.S. recovery

Posted Aug 11th 2009 3:00PM by Joseph Lazzaro
Filed under: FedEx Corp (FDX), Stocks to Buy

If you managed to establish a position in FedEx (NYSE: FDX) in April, you're up about 30%, which is not bad, given current economic conditions.

To be sure, FDX is not as cheap as it was then, but I'm still Reiterating my Buy rating for the company, first recommended on April 13, 2009 at a price of $50.98. Here's why:

Any signs of better-than-expected U.S. GDP growth will send even more institutional investors into delivery stocks. Second, FDX's EPS growth should outperform the market during the next 3-5 years -- another metric that the big institutions look for. The First Call FY2009/FY2010 EPS estimates for FDX are $2.68 to $3.83.

Stock Analysis: FedEx is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in FDX now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your FDX position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $27.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

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