This Logistics Play Remains Undervalued With Upside Ahead

One key theme of the past two years has been logistics, with an emphasis on supply chains. The world has gone from just-in-time inventory systems to creating a buffer to avoid having to contend with shutdowns stemming from any uncertainty.

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  • Companies in the shipping realm have largely benefitted, as the creation of inventories and stockpiling has led to an increased demand to ship goods for storage before use more locally. Adding to that is the overall improving economy, which is also benefitting the shipping trend.

    One winner for that category to buy on any market fear is FedEx (FDX). The global shipper is an inexpensive play right now, just coming off of 52-week lows set at the start of March.

    Now, with the company promoting its chief of logistics into the CEO role, the company looks set for further gains in the months and years to come.

    Action to take: Shares are attractively priced at about 12 times current earnings, and under 10 times forward earnings. Even with the stock moving higher in the past few weeks, shares are down about 19 percent over the past year, indicating the potential for a further move ahead. Today’s shareholders can lock in a 1.3 percent yield to get started.

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  • For traders, the July $250 calls, last going for about $6.75, look like they could leverage a continued move higher in the coming weeks. Traders should look for mid-to-high double-digit returns.

     

    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 of the companies mentioned in this article.

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