We recently published a list of 7 Best Delivery Stocks To Invest In Now. In this article, we are going to take a look at where FedEx Corporation (NYSE:FDX) stands against other best delivery stocks to invest in now.
An Overview of the Delivery and Courier Industry
The delivery and courier industry is diverse, encompassing a wide range of services that connect businesses and consumers through various shipping methods. Parcel delivery services are a major component, with companies offering both domestic and international shipping options, driven by the rise of e-commerce.
Another significant segment is food delivery platforms. These platforms connect hungry customers with local eateries, creating a new business model that thrives on convenience. Overall, the delivery industry is evolving rapidly, with diverse players working to meet the growing expectations for speed and reliability in shipping services.
According to Zion Market Research, the global on-demand delivery market was valued at $15.19 billion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 20.90% during 2024-2032 to reach $83.82 billion by the end of the forecast period. In 2023, the Asia-Pacific region led the market in revenue and is projected to maintain its dominance throughout the forecast period.
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This growth is fueled by increasing consumer expectations for fast and reliable delivery services, particularly same-day and next-day options. Experts highlight that the demand for quick deliveries has led to substantial investments in last-mile delivery solutions and advanced technologies, such as automation and artificial intelligence (AI).
In 2024, consumers have continued to prioritize free and fast shipping for their online orders, according to recent data from Digital Commerce 360 and Bizrate Insights. A survey of 1,013 online shoppers revealed that 81.34% consider free shipping their top priority when receiving deliveries. Fast shipping follows closely, with 68.41% of respondents highlighting its importance. Additionally, 55.68% of consumers emphasized the need for retailers to keep products in stock and ready to ship.
AI and automation are key trends that are significantly transforming the delivery services industry, making operations more efficient and responsive to consumer demands. For example, companies like DHL Express have introduced the DHLBot in Singapore and South Korea. The DHLBot is an AI-powered robotics arm that can sort over 1,000 small parcels per hour with 99% accuracy. This technology not only speeds up the sorting process but also reduces labor costs and minimizes errors, allowing for quicker deliveries.
As the industry evolves, it is clear that AI and automation will play a crucial role in shaping the future of delivery services.
Methodology
To compile our list of the 7 best delivery stocks to invest in now, we used the Finviz and Yahoo stock screeners to find the largest delivery companies. We also reviewed our own rankings and consulted various online resources. From an initial pool of more than 20 delivery stocks, we focused on the top 7 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 7 best delivery stocks to invest in now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A driver unloading packages from a van for a time-critical delivery.
FedEx Corporation (NYSE:FDX)
Number of Hedge Fund Holders: 59
FedEx Corporation (NYSE:FDX) is a global provider of transportation and logistics services. Serving over 220 countries and territories, the company operates a vast network that includes express delivery, ground shipping, freight services, and e-commerce solutions.
FedEx offers a wide range of delivery services to meet various shipping needs. The company has an impressive infrastructure that includes one of the largest air cargo fleets in the world, which is crucial for efficient parcel delivery and logistics management.
Recently, FedEx Corporation (NYSE:FDX) announced its earnings for the first quarter of its fiscal year 2025, which fell short of expectations for both revenue and earnings per share (EPS). However, the company remains focused on improving its profitability through its DRIVE program, aiming to save $4 billion by the fiscal year 2025. In the first quarter alone, the company achieved significant savings of $390 million from this initiative, demonstrating its effectiveness in cutting costs.
The company has a substantial capital expenditure plan of $5.2 billion for FY 2025. This investment is directed toward high-return areas within its business, showing a commitment to long-term growth. As of August 31, FedEx Corporation (NYSE:FDX) has $5.9 billion in cash on hand and a strong balance sheet. This positions the company well to navigate challenges and invest in future opportunities.
FedEx Corporation (NYSE:FDX) successfully completed $1 billion in stock repurchases during the first quarter and plans to buy back an additional $1 billion in the second quarter. This strategy reflects the company’s confidence in its long-term growth and commitment to returning value to its shareholders.
Analysts are also bullish on FDX. Analysts currently hold a consensus buy rating on the stock and the 1-year median price target of $314.50 set by analysts indicates a potential upside of 14% from current levels.
According to Insider Monkey’s Q2 2024 database of over 900 hedge funds, 59 hedge funds held stakes in FedEx Corporation (NYSE:FDX).
Overall, FDX ranks 4th on our list of best delivery stocks to invest in now. While we acknowledge the potential of delivery companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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. This article is originally published at Insider Monkey.