FDX: Continues to Deliver
His early days at Yale spawned the concept of what would become FDX. After graduating with a degree in economics, it was on to the hell of the Vietnam War serving as a Marine and receiving the Silver Star, the Bronze Star and two Purple Hearts. At the age of 27 he would start up FDX, some two years after he was discharged from the Marine Corps. He has been the company's very able CEO ever since!
Today FDX is correctly positioned for growth in its core business. Shipping revenues are rising, a trend that looks like a winner as we move into 2012 in spite of the plethora of recent financial news reporting of European financial problems. That type of commentary rings a bell. The same was said of our economy throughout this past summer.
FDX has an excellent balance sheet as the company is basically debt-free (cash exceeds total debt)! It is growing earnings at least 15% annually, a rate that equates well to its P/E ratio. The company is basically debt free as the total cash position exceeds total debt by almost $300 million.
Let's review the T3/OP video with Jill and Scott and they walk you through the fundamental and technical case for a trade:
Traders know that making a profit from the short side of FDX is risky business as its low 1.5% short interest float will attest. The lower the short interest, the less the professional trader wants to play the short side of the stock.
The trade strategy I like for FDX is the vertical call spread. This trade is medium in risk as it is a controlled risk spread and medium in reward potential because it is a hedged trade.
Trades: Buy to open 3 FDX April 82.5 calls for $5.00 and sell to open 3 FDX April 87.5 calls at $3.00.
The total risk for the trade is the premium paid, or $2.00. The option pricing is predicated on FDX trading around $80, $1+ lower than where it closed Monday. Thus, there is additional very short-term selling in FDX is built into these prices. Please make note of that fact.
This content brought to you by TheStreet's OptionsProfits. CLICK HERE FOR A 14-DAY FREE TRIAL.
OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits
T3Live can be followed on Twitter at twitter.com/_t3Live_
Check Out Our Best Services for Investors
Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts