FedEx (NYSE: FDX) vs. United Parcel Service (NYSE: UPS) The reason we're looking at the relationship between FedEx and UPS right now is simple... As you'll see, FedEx looks extremely cheap compared with UPS. And that could set up a tremendous opportunity for you right now. Here's the scoop... Right now, FedEx trades at 10X projected 2022 earnings. Meanwhile, UPS trades at 15X projected 2022 earnings. If that gap seems extremely wide to you, you're not alone. Barron's says that UPS "trades at an unusually wide premium to FedEx." Both stocks have traded lower recently, which could be attributed to Wall Street's concerns about the economy - think fuel prices - or even consumer spending. But it's not every day that you see a dominant duopoly with such a large valuation gap. FedEx has a 30% market share in the ground delivery segment. So why is there such a dramatic difference in premium between UPS and FedEx? Here's my explanation... It was recently reported that Fred Smith, who founded FedEx 51 years ago, will step aside as chief executive on June 1. I think this announcement has brought additional fear, apprehension and uncertainty to FedEx shares - which explains exactly why we've seen the company dip compared with UPS. But to me, this is a major opportunity. After all, FedEx is scheduled to hold an investor day in late June - shortly after Fred Smith officially steps aside. At this meeting, the company will most likely present on how it plans to boost margins and profitability. The meeting could act as a trigger for Wall Street to breathe a sigh of relief and move back into FedEx shares. YOUR ACTION PLANSo buying now - while FedEx's share price is down - could be a savvy and opportunistic maneuver. When it comes to trading, the time to act is BEFORE the trigger catalyst - and that means now in this case. And if you are looking for another timely play, Karim has found a stock for less than $2 that fits the bill. We both agree there isn't a single stock trading at a better valuation. But you'll have to get in soon - because there's an announcement coming on May 12 that could send shares higher. Click here to get the details on this stock. |
No comments:
Post a Comment