Watch For Today's Momo Momentum Stock: FedEx (FDX)
Trade-Ideas LLC identified
(
) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified FedEx as such a stock due to the following factors:
- FDX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $193.2 million.
- FDX has a PE ratio of 42.
- FDX is currently in the upper 30% of its 1-year range.
- FDX is in the upper 25% of its 20-day range.
- FDX is in the upper 35% of its 5-day range.
- FDX is currently trading above yesterday's high.
- FDX has experienced a gap between today's open and yesterday's close of 0.6%.
'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.
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More details on FDX:
FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. The stock currently has a dividend yield of 0.6%. FDX has a PE ratio of 42. Currently there are 10 analysts that rate FedEx a buy, no analysts rate it a sell, and 6 rate it a hold.
The average volume for FedEx has been 1.6 million shares per day over the past 30 days. FedEx has a market cap of $44.1 billion and is part of the services sector and transportation industry. The stock has a beta of 1.51 and a short float of 1% with 2.49 days to cover. Shares are up 10.4% year-to-date as of the close of trading on Friday.
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Analysis:
rates FedEx as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- FDX's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 8.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has slightly increased to $1,342.00 million or 1.51% when compared to the same quarter last year. Despite an increase in cash flow, FEDEX CORP's average is still marginally south of the industry average growth rate of 3.89%.
- FEDEX CORP's earnings per share declined by 16.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, FEDEX CORP reported lower earnings of $3.60 versus $6.79 in the prior year. This year, the market expects an improvement in earnings ($10.80 versus $3.60).
- The gross profit margin for FEDEX CORP is currently lower than what is desirable, coming in at 27.93%. Regardless of FDX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.00% trails the industry average.
- You can view the full FedEx Ratings Report.
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