FedEx (FDX)

Would sell UPS and buy Fedex. Fedex is better managing headwinds from Amazon. They also have more areas that Amazon won' tackle. Wouldn't invest in either due to high cost in order to compete. Their current infrastructure is not ready to compete in the e-commerce world, and will eat up their free cashflow.

Almost a top pick today. FedEx suffers from investors worried over Amazon's plans to go into shipping and the troubled world trade picture, but Amazon accounted for only 1% of FedEx's profits. Also, FedEx trades at 10x next year's earnings, so why not buy some and hold it for several years?

He looked at it. They still have a few issues in integrating recent European acquisitions. There is lots of cost pressure. Autonomous driving could be a huge boon to them. They are getting out of the AMZN-Q game. There is a lot of disruption in the sector right now and not in FDX-N's future.

This moves North America's goods. It really depends on the economy. Amazon is moving away from them, but the thinks they will do well.

They just had earnings and warned that the US-China trade war is hurting them. He doesn't see growth this year. They are divorcing from Amazon and face higher costs with a recent integration. But beyond the 2020 hump (if the China-US trade war gets resolved) they will grow 10% EPS at 11.7x PE. It will grow again. Buy it when it's fumbling now. He likes it.

A headwind is breaking off with air express contract and now the ground contract with Amazon, leaving just the international deal, but thost cuts amounted to only 1.5% of FedEx's revenues. The valation and stock price are down nearly 50% from its highs, and expectations have declined. Meanwhile, e-commerce is the only area that continues to grow. FedEx is going small small/medium businesses. FedEx has an advantage over Amazon, because FedEx has 30 years of overnight delivering, whereas Amazon is on a learning curve. (Analysts’ price target is $186.44)

The bullishness has come down, but he'd buy it. Good valuation. He didn't expect them to be in the crosshairs of the US-China war. They've made good acquisitions and expanded well internationally. But trades at a 13x forward multiple. Generates decent cash. He is adding more. Hold on, if you own. Amazon getting into shipping is an outside risk, but this portion of Amazon's business is so small.

In the old days this traded along with the US economy as they moved the goods that drove the country. Now that Amazon has come along, that has been disrupted, which as eaten into their business. He would stay away for now.

The volatility arose because China will have an issue with them. Mind you, there's only FedEx and UPS in this space. FedEx has been helped by the rise of e-commerce and will continue to benefit from that at times like Christmas. FedEx will also enjoy growth abroad. A caveat: This is a costly business/industry, though FedEx has wisely used technology. China won't be a big problem for them. FedEx will benefit greatly from global growth.

Write downs caused by Amazon? He holds this in the large cap portfolio. The macro issues surrounding trade issues with China has impacted them. They will no longer be shipping for Amazon, but it was only a couple of percentages points of their business. He is excited about their involvement in e-commerce. Their cost model is highly adjustable to new technology -- like autonomous vehicles. It is trading at the lowest valuation metrics in the past two decades. He thinks this is transitory for the most part.

The lower price is not due to competition from AMZN-N. AMZN-N is 1 to 2 percent of revenues for FDX-N. Most of the headwinds have been trade related which are unwarranted because the US revenue from Chin is only 2%. They are having issues integrating their TNT express acquisition in Europe. If you ignore Ecommerce, and just consider business to business deliveries, it is very meaningful for companies. If anyone can use drones to make household deliveries, AMZN-Q can do it but it is very early days.

They've had a round trip since October 2015, rising high then falling back to that 2015 level all because of the Amazon effect (Amazon using other forms of delivery). That said, FedEx's earnings forecasts have held up beautifully. Fair market value upside could be as much as 90%. Historically, their shares peak right at fair market value. There's good technical support at $146, so you can buy at that level. PE is only 9.5x. What's not to like?