FedEx Corporation (FDX), United Parcel Service, Inc. (UPS) & Expeditors International of Washington (EXPD): Should You Invest in These 3 Air Freight Companies?

Strong volumes in Asia

Airfreight trends in Asia are showing improvement in the first quarter of 2013, as shipment volumes in Hong Kong and Shanghai were up by 4% and 17%, quarter over quarter, respectively. Consequently, Expeditors International of Washington (NASDAQ:EXPD)’s shipment volume in these regions also increased by 10%. It posted shipment growth of 45% in the previous fiscal year in Asia. Expeditors International of Washington (NASDAQ:EXPD) is mainly based in China and is well-positioned in other Asian countries. With growth in airfreight volumes, it is estimated that potential revenue growth of 12.5% will be achieved by the company in 2013.

Expeditors International of Washington (NASDAQ:EXPD) reported cash in hand of $1.4 billion in the first quarter of 2013. The company is well-positioned to repurchase 3.6 million shares in the second and third quarters of 2013. It is expected that around 6.1 million total shares will be repurchased in 2013. The company generates regular free cash flow of around $330 million annually, and had zero debt as of the first quarter of 2013.

Conclusion

Due to the low bid price of the USPS contract, FedEx Corporation (NYSE:FDX)’s revenue will decline by $100 million per year. However, in the long run, the company will benefit from its cost reduction plans and is expected to improve profitability significantly. Though, increment in wages will negatively affect the profit of United Parcel Service, Inc. (NYSE:UPS) in short term, growth in the U.S. economy  and e-commerce, will boost B2C volumes. Moreover, UPS’ tracking system, ORION, will improve its profit in the future. Increasing volume will be beneficial for Expeditors International of Washington (NASDAQ:EXPD), as it is well-positioned in the Asian market. Moreover, due to its share buyback program, the stock price has nice upside. I recommend investors buy all three stocks.

Shweta Dubey has no position in any stocks mentioned. The Motley Fool recommends FedEx Corporation (NYSE:FDX) and United Parcel Service, Inc. (NYSE:UPS). The Motley Fool owns shares of Expeditors International of Washington (NASDAQ:EXPD).

The article Should You Invest in These 3 Air Freight Companies? originally appeared on Fool.com.

Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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