Investors are gravitating towards the idea that the Federal Reserve is pulling off a soft landing. Aggressively raising interest rates is pushing inflation back down. But it’s doing so at a rate that isn’t leading to a recession.
Ideally, that creates a scenario where the economy can continue to grow from a low-inflation base. That’s played out before, when the Fed’s moves in the early 1990s led to a soft landing that allowed the economy to take off in the late 1990s.
One sign that this trend may be playing out is with shipping and logistics provider FedEx (FDX). FedEx just reported better-than-expected earnings, allowing shares to jump higher.
FedEx is now seeing higher revenues, even though earnings still slid 10% last year. With the company shifting back to profitability, investors are likely to keep pushing shares higher.
Shares are still inexpensive at 12 times earnings. And the company operates an oligopoly business with just a handful of other competitors.
Action to take: Investors may like shares here. FedEx shares are showing strong signs of continued momentum, which will likely push the stock even higher.
At current prices, FedEx also pays a 1.9% dividend.
For traders, the July $390 calls, last trading for about $9.05, could see mid-double-digit returns on a continued push higher in shares in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.