"Hurricane Sandy's impact will likely lead to a mixed headline number and...big storms such as Sandy hurt the air freight carriers in a several ways: having to ground fleets ahead and during the storm, incurring aftermath cleanup costs and running up transportation/line haul costs to guarantee commitments previously made to its customers."
Also, international markets (especially Europe) are and have been a mixed bag for FDX. "Much of this is already expected, with analyst estimates having come down over the last few weeks" Link and Cramer opined.
The investment theme for FDX isn't only "...based on its near-term earnings power but rather because it is tied to the leverage in the reacceleration of global trade growth." Analysts are looking for 1.9% sales growth in revenue for the current quarter compared to last year's same quarter.
"We also like the company's restructuring program that is under way, as we believe it will lead to $1.6 billion in profit improvement (by fiscal 2016), the exposure to the emerging markets/recovery in China, and the relative valuation -- a 23% discount to its largest rival, United Parcel Service (UPS - Get Report) is well below the last five years, which was 12.3%" Link and Cramer said.Maybe the allegations and next Wednesday's earnings report don't really matter, because according to the Mayan calendar the world may be ending two days afterward on Dec. 21. That day, coincidentally, is the first day of winter. Perhaps a new ice age will suddenly befall us, which may be a plus for utility stocks. Assuming someone has misunderstood both the Mayan calendar and FedEx's integrity, by the time all this media hype and the fiscal cliff drama plays itself out, investors may be able to buy shares of FDX at close to its Nov. 19, intraday low of $85.80. At least that would be a better entry point to invest in one of the great players in the air delivery and freight services industry. By market cap FDX is much smaller ($28 billion) than its main competitor UPS ($70 billion). By the measure of trailing 12-month operating margin FDX (7.6%) is way behind its big, "brown" rival UPS (9.77%) by a factor of almost 29%. FDX has great growth potential, but the proof of the pudding will be in the eating. At the time of publication the author held no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. Jim Cramer's protege, Dave Peltier, finds you Stocks Under $10 picks with explosive upside potential. See what he's trading today with a 14-day FREE pass.
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