1. FedEx Corporation (NYSE:FDX)
Number of Hedge Fund Investors: 55
FedEx Corporation (NYSE:FDX) is still the largest distributor of expedited packages worldwide and the best Best Freight Stocks, having pioneered overnight service in 1973. The firm made 47% of its income from its express division, 37% from ground, and 10% from freight, its asset-based less-than-truckload shipping segment, in the fiscal year 2024, which concluded in May. The remainder comes from other services, such as FedEx Office, which produces and ships documents, and FedEx Logistics, which provides global forwarding. In 2016, the company expanded its European footprint by acquiring the Dutch transportation company TNT Express.
As the biggest less-than-truckload carrier in the US, FedEx Corporation (NYSE:FDX) aids in building strong bonds with both industrial and retail shippers on the package side. The business has steadily improved its ground positioning over the past ten years, supported by capacity investment and a minor speed advantage over UPS.
Despite a difficult demand environment, FedEx Corporation (NYSE:FDX)’s transformation initiatives, such as the DRIVE program, have resulted in cost reductions of $2.2 billion, increasing adjusted diluted EPS to $4.05 in Q2 FY2025. The company’s outstanding shareholder returns and operational efficiency are highlighted by the $1 billion in share purchases it made during the quarter and its projected full-year adjusted diluted EPS of $19.00–$20.00.
The price objective for FedEx Corporation (NYSE:FDX) was increased by BMO Capital from $300 to $330 following its Q2 results. The analyst tells investors in a research note that although FedEx’s guidance was lowered due to ongoing demand and macro headwinds, the package segment’s underlying performance continues to show progress on the front of structural cost reduction, positioning FedEx to leverage an eventual demand recovery. BMO commented that FedEx’s decision to move forward with a complete separation of the LTL business is a welcome holiday gift to shareholders and has the potential to unlock immense value.
Michael Larson’s Bill & Melinda Gates Foundation Trust was the largest stakeholder in the company from among the funds in Insider Monkey’s database. It owns 2.53 million shares worth $693.60 million as of Q3.
Sound Shore Management stated the following regarding FedEx Corporation (NYSE:FDX) in its Q3 2024 investor letter:
“Meanwhile, detractors of note for the quarter were connected by a common theme: signs of a slowing economy. NXP Semiconductors, a leading chip maker for the auto industry, was lower on uncertain auto demand and package hauler FedEx Corporation (NYSE:FDX) lagged on muted volume trends. Importantly, both of these companies have ways to increase earnings outside of the business cycle, but are not entirely immune to the recent slowdown. Business cyclicality requires investor patience and a long-term perspective – we have both.”
Overall, FedEx Corporation (NYSE:FDX) ranks first on our list of the 9 Best Trucking Stocks To Buy. While we acknowledge the potential for FDX to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FDX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. 9 Best Trucking Stocks To Buy is originally published on Insider Monkey. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
