Can FedEx Continue to Deliver?

Ed Ponsi

  • FedEx reported quarterly earnings after Tuesday's close
  • EPS est. $2.54 per share, actual $4.87 per share
  • Revenue est. $17.46 billion, actual $19.3 billion
  • Stock is up 40 percent in the past five weeks

While 2020 has been a rough year for many businesses, it's been ideal for companies like FedEx. However, that could change. We might see a vaccine approved as soon as October, with possible widespread distribution by early next year. That could mean fewer online purchases, and fewer deliveries for FedEx. 

While this is a Goldilocks environment for FedEx, this environment is not going to last. Six months from now, FedEx could be looking at a completely different situation. 

Eventually, consumers are going to get out and go places, and that includes shopping. While FedEx has an advantageous environment right now, I don't think we can extrapolate the company's current level of success into next year. 

FedEx chart by TradeStation

FedEx's weekly chart shows that while the stock has had an amazing run, it's running out of headroom. The entire area between $260 and $275 is a thicket of resistance left over from 2018. To buy this stock now, after its amazing run and just prior to the stock hitting potential selling pressure, seems like a risky proposition. 

Frankly, I'd rather buy the stock lower or higher than its current price. We always like to buy low, but if the stock can break above $275, FedEx will reach a new multi-year high. This means there is no remaining overhead resistance, which is bullish for the stock. 

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Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here.