Rush Delivery: Get FedEx In Your Portfolio

Top Gold Stocks To Watch For 2014

Investing Daily analysts have been bullish on FedEx Corp (NYSE: FDX) and current indicators show that a positive sentiment is still appropriate for the company.

See here and here for more background on Federal Express from InvestingDaily.com experts.

Finding good stocks like FDX is becoming paramount, as winter gives way to spring. The S&P 500 is only up by one percent so far this year, and that's after a plunge of negative 5.5 percent in January. Geopolitical upheaval in the Ukraine, high debt in key emerging market countries like China, and a sluggish US jobs market are all pulling down the US stock market right now.

In an interview with TheStreet.com this week, Dan Veru, Palisade Capital Management’s chief investment officer, says he expects the stock market to hold its uneven performance "for three to six months."

But FDX is showing all the signs of being the exception to the rule, and should see its stock price (about $137 per share this week) to rise above $155 per share this year. How so?

Take the company's third-quarter financials. The firm doesn't post its Q3 revenues until Wednesday, March 19, but there's enough data out there to show that Fed Ex has survived a rough winter and is poised for upward growth for the remainder of the year.

The third quarter was a wild one for the nation's second-largest shipping service. It included the all-important holiday shopping season, which wasn’t kind to Fed Ex and its arch rival UPS (NYSE: UPS), the top shipping services company in the US. The season included the worst winter weather conditions in years, which impacted the ability of delivery companies to ship client packages.

Still, the news looks upbeat for Fed Ex. Here's what the company is expecting from its own fin! ancial projections:

E-Commerce shipments are expected to be up 6 percent.Sales are expected to rise by 5 percent versus the same quarter in 2012.Earnings per share (EPS) should grow by 23 percent, to $1.51.Fed Ex raised its earnings guidance for the entire year by 8 percent to 14 percent growth, up from 7 percent to 13 percent.Net profits should rise by 14 percent, spurred by FDX's move to more fuel-efficient aircraft and a drive to lower retirement pension and health care costs (more on that below).Fed Ex also reports that it hiked its freight shipping rates by 3.9 percent, as of March 31, 2014.

Analyst expectations are pretty much in line with Fed Ex's own financial projections for Q3. A survey of analysts by Thomson Reuters out this week shows FDX should report $11.46 billion in revenues, and $1.52 in EPS. Those figures represent a 5 percent and 7 percent growth rate, respectively.

Q3 numbers, as indicated above, may be skewed due to the volatile winter weather conditions in most of the US in January and February. Citigroup analysts as much as said so, lowering their Q3 EPS estimates from $1.55 to $1.45, citing "severe winter weather", which certainly won't be a factor for the last nine months of 2014. That's why Citi still holds a "buy" on FDX.

Reports of significant insider selling may be spooking some potential FDX buyers, but those fears are overblown – Fed Ex is in the midst of a major stock repurchase program and company sellers are looking to leverage the opportunity and sell at historic high share price levels.

The stock buyback program, which FDX launched last October, only targets 10 percent of all the company's outstanding shares. The company is targeting a good chunk of the stock repurchase program to pay off employees who accepted buyout packages, which should eventually lower operational costs, especially in terms of retirement and pension costs.

Thomson Reuters points out that FDX pension and retirement health care costs have already! fallen f! rom $5.6 billion in May, 2012, to $3.7 billion in November, 2013.

On the revenue side, Fed Ex is also hiking its freight delivery charges by 3.9 percent, after raising its residential ground delivery and express service fees by 4.6 percent in January, 2014. That should help both segments, which account for the bulk of FDX's revenues going forward, and coupled with the move to curb operational expenses, help drive FDX's stock price upward.

All in all, FDX is a healthy "buy" for Investing Daily investors, who could really use a special delivery stock winner in an uneven stock market so far this year.

Brian O'Connell is an investment analyst at Investing Daily. He also is chief investment strategist of 401k Millionaire. He has appeared as an expert financial commentator on CNN, NPR, Fox News, Bloomberg, CNBC, C-Span, CBS Radio, and many other media broadcast outlets.

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