Like its biggest rival, shipping giant FedEx (FDX - Get Report) is reeling from the after-effects of Hurricane Sandy this month. The storm added significant logistical challenges to FedEx's normally difficult job of delivering parcel delivery, but it shouldn't have a material impact on FDX's financial performance.
With UPS (UPS), FedEx makes up a shipping duopoly here in the U.S. While Brown's integrated operations make it the bigger of the two, FedEx is the bigger express shipper, a niche that affords FDX more lucrative margins. While lower-cost ground shipping is a relatively new add-on business for FedEx (the firm acquired it just over a decade ago), it's become extremely profitable for the firm overall, even in the high fuel cost environment that management continues to do battle with.
The shipping business has extremely high barriers to entry that make increased competition unlikely. DHL's corpse in the domestic shipping market serves as a visible warning for other firms who want a piece of the U.S. shipping business. With retail locations, drop boxes, and the fourth-biggest fleet of airplanes in the world (and three times as many planes as UPS), FedEx's network is extremely tough to replicate. With rising analyst sentiment this week, we're betting on shares.To see all of this week's Rocket Stocks in action, check out the Rocket Stocks portfolio at Stockpickr.
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