FedEx is taking an exciting ride.
Shares of the shipping giant closed half of 1% higher on Wednesday after Barclays named the stock its top pick among the transports. The analysts cited the company’s “exceptional growth,” fueled in large part by e-commerce.
FedEx reported a 23% year-over-year revenue increase in its fiscal third-quarter earnings release last week, with Chief Financial Officer Michael Lenz citing an “unprecedented” holiday shopping surge.
The stock — which has only one underweight rating among the major analyst firms — has an average price target of $335.03, according to FactSet, nearly 25% above Wednesday’s closing price of $268.29.
Quint Tatro, founder and chief investment officer of Joule Financial, told CNBC’s “Trading Nation” on Wednesday he is “on the Barclays bandwagon,” adding, “the analyst is citing an increase in margins, resulting in pretty significant uptick in free cash flow. What’s not to like?”
“I’m not so sure I’d necessarily agree with the huge surge in e-commerce, but the company has a very disciplined [capital expenditures] approach, so, I see certainly the opportunity for the cash flow to increase and the numbers to be hit,” he said.
JC O’Hara, chief market technician at MKM Partners, said that while transports stocks such as FedEx “have been the backbone” to the economic recovery, his favorite was XPO Logistics.
“I like this transportation company because the longer-term chart is extremely bullish. It broke out last December, consolidated over the last three months, and it has pulled back to buyable levels at $115.”
XPO, which recently announced plans to spin off its massive logistics business, could also be a short-term play, O’Hara said.
“If we broke above $130, we could easily set a technical price target back to $145, so, I like the upside potential that XPO Logistics has right here,” he said.
XPO Logistics closed less than half of 1% lower at $116.50 on Wednesday.
