Goldman Sachs’ Top Fund Manager Stock Picks: 25 Best Overweight Stocks

16. FedEx Corporation (NYSE:FDX)

Number of Hedge Fund Holders In Q2 2024: 59

Overweight Percentage: 0.10%

FedEx Corporation (NYSE:FDX) is one of the biggest operators in the American courier and logistics industry. The firm caters to the needs of both businesses and consumers, and it offers shipping by land, air, and sea. Because of the fact that it covers most of the US freight market, FedEx Corporation (NYSE:FDX) is more vulnerable to broader disruptions in the industry as opposed to smaller firms that are regionally focused. This has also been the case in 2024, which has been a roller coaster of a year for the courier’s stock. In June, FedEx Corporation (NYSE:FDX)’s shares soared by 15.5% as the firm’s midpoint fiscal 2025 EPS guidance of $21 was slightly higher than Wall Street’s estimate of $20.92. EPS is key for courier companies as they often face tough competition to keep prices low and retain or capture market share and are constrained on the margin front if volumes are low. FedEx Corporation (NYSE:FDX) expects to further improve margins in the near future by reducing costs associated with the Postal Services’ overnight delivery contract. The share price gain was short lived, as the stock dropped by 15.2% in September after FedEx Corporation (NYSE:FDX)’s fiscal year 2025 operating income guidance was cut to a midpoint of $20.5 from an earlier $21. Its results also saw the firm’s daily volumes, daily shipments, and freight shipments drop annually, which ignited investor concerns of macroeconomic sluggishness. Looking ahead, cost savings improving the bottom line and an uptick in priority shipments could create tailwinds for the stock.

Longleaf Partners mentioned FedEx Corporation (NYSE:FDX) in its Q2 2024 investor letter. Here is what the fund said:

“Global logistics company FedEx was the top contributor for the quarter. Late in the quarter, FedEx reported strong fiscal year results, highlighting a year of strong cost management in a challenging revenue environment. Earnings per share (EPS) 4 increased by 19%, and reduced capital expenditures narrowed the gap between EPS and FCF per share. With the increase in FCF, the company has become a significant share repurchaser, which is a welcome change. The company also announced a strategic review of their Freight segment. Our appraisal has long accounted for the underappreciated value in FedEx’s less-than-truckload operations. A potential spin-off or sale could unlock substantial value, as comparable companies like Old Dominion trade at significantly higher multiples on revenue, cash flow, and earnings than those applied to FedEx Freight by the market and our appraisal today.”