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Big Expectations Going Into FedEx's Analyst Meeting

Stephanie Link:

Well that's the thing. They are going to have to do something, and do something big, this week. So that's what we're kind of counting on, that they are going to make a bigger announcement than what most people are expecting. Now, should the stock fall on news because maybe we get just an in-line restructuring kind of thing? That's okay too because at least they are getting more efficient and their margins should improve over time. You'll just have to be a little more patient.

I do think that at these current valuations you are talking about 11 times earnings. Historically it's traded at 14 times. And it's trading at a 20 percent discount to UPS, which is the largest that it's really ever traded at. That is absolutely warranted at this point, given that hasn't executed as well as UPS, but I do think over time our bet is that they will narrow that gap.

Lindsey Bell:

Could UPS be a good buying opportunity, just on that holiday bump that you discussed?

Stephanie Link:

Sure. Certainly. I think both really can coexist at this point. And you have a nice dividend yield with UPS. We just thought that the valuation was a little bit more attractive for FedEx. There's a few more catalyst here in the near term, but certainly UPS is a great story. We've owned it in the past. They've got to get through that TNT acquisition, and that's kind of a mess at this point, but I like that one for the long term as well.
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