FedEx (FDX)

Buy now ahead of the holiday shopping season? It's cheap, trading at 10x earnings. They have 3 issues: they're losing revenues from losing Amazon; the TNT Express acquisition has been really difficult to absorb; and they are going to 7 days of ground delivery which raises their costs. That said, you can wait and buy FedEx when it's cheaper.

(A Top Pick Dec 28/18, Down 5%) A surprise is that Fedex became a poster child for the impact of the trade war. Amazon represented 2% of the business and even with them entering the space, it will take some time to build out the infrastructure. The valuation is very cheap right now and there is still some growth. They've recently added to the position.

Buy during negative sentiment? Moodys just upgraded FedEx. Global trade is under pressure, so that's a headwind. Also, Amazon could very well build their own delivery network for certain parts of their operation. They manage to build AWS, in comparison. So, Amazon is a greater worry to FedEx. So, he's cautious about FedEx.

They missed their numbers but issued downbeat guidance. They also divorced from Amazon, who are now competing against them. Third, the trade war is impacting their earnings. FedEx is basically saying that the global economy is slowing. They need to make up for the Amazon loss, perhaps dealing with Shopify or something. The DHL acquisition didn't integrate well.

He owned it for a decade, but got stopped out last year. It's down 30% off its highs, but 70% of their business is NOT e-commerce. They have lots of room to grow into e-commerce. Some individual brands are bypassing Amazon and using FedEx directly to deliver. 50-60% of Walmart deliveries use FedEx who are putting 500 stores into Walmarts. Good brand and valuation. (Analysts’ price target is $188.42)