5. FedEx Corporation (NYSE:FDX)
Number of Hedge Fund Investors: 59
Jim Cramer believes that FedEx Corporation’s (NYSE:FDX) CEO, Raj Subramaniam, has done an impressive job in steering the company toward a long-term recovery. According to Cramer, this turnaround won’t lead to immediate or dramatic results, but it will unfold over several years. He suggests that investors consider buying FedEx Corporation’s (NYSE:FDX) stock before the company’s next earnings call, as he expects Subramaniam to present a compelling case for FedEx’s future growth. Cramer is confident that Subramaniam’s vision will provide a strong narrative, making it a worthwhile investment ahead of the conference.
“FedEx Corporation (NYSE:FDX)’s Raj Subramaniam has done a remarkable job. I believe it’s a multi-year turnaround—nothing that’s going to blow anyone away in the short term—but I think you should be in the stock ahead of the conference call because I believe he’s going to tell a very compelling story.”
FedEx Corporation (NYSE:FDX) is an attractive investment option due to its strong financial performance, effective cost-saving strategies, and solid market position. For fiscal 2025, FedEx Corporation (NYSE:FDX) projects impressive earnings with an EPS forecast of $18.25 to $20.25 and expects revenue growth in the low to mid-single digits. FedEx Corporation’s (NYSE:FDX)’s “DRIVE” transformation initiative aims to save $2.2 billion by optimizing its network and modernizing its fleet, boosting operational efficiency.
Additionally, FedEx Corporation (NYSE:FDX) plans to return substantial value to shareholders through $2.5 billion in stock repurchases and a 10% increase in dividends, showing confidence in its cash flow and future growth. Analysts are optimistic, with a 12-month price target averaging $317.78 and some estimates reaching $359, reflecting strong profitability and return on equity. Institutional interest and unusual options activity also suggest positive sentiment towards FedEx Corporation (NYSE:FDX)’s stock.
Longleaf Partners Fund stated the following regarding FedEx Corporation (NYSE:FDX) in its Q2 2024 investor letter:
“FedEx Corporation (NYSE:FDX) – 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) 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.”
