Editor's Pick: Originally Published Wednesday, Dec. 23


Looking for a beaten-down, large-cap industrial stock that can outperform the market in 2016 and pays a dividend?

Consider global transportation giantFedEx (FDX) - Get Report .

On one hand, FedEx shares, at around $146.40, are down nearly 16% for the year to date compared with a 3% decline in the Dow Jones Industrial Average (DJI)  and a nearly 2% decline in the S&P 500 (SPX)  .

However, TheStreet's Jim Cramer considers FedEx to be a good indicator of the health of the U.S. economy, and the company reported stronger-than-expected earnings last week thanks to a boost in online shopping orders. All that free shipping of online purchases "went to FedEx's bottom line," according to Cramer.

In addition, it "under-promised on pricing and then over-delivered with some excellent cost controls and very strong on-the-ground business, with a 9% increase in volume and a 10% increase in pricing," Cramer wrote in a recent Real Money column.

Exclusive Look Inside:

You see Jim Cramer on TV. Now, see where he invests his money and why.Learn more now.

At its current share price there's an implied 20% gain to be made on FedEx shares based the stock's consensus buy rating and average analyst 12-month price target of $175. If shares were to reach their high target of $210, the implied gain is about 45% from current levels. The company even pays a 25-cent quarterly dividend that yields about 0.68% annually.

FedEx is projected to increase earnings at an average rate of more than 13% annually for the next five years, twice the S&P 500 index. It would also be two percentage points higher than competitor UPS (UPS) - Get Report . FedEx's earnings-growth performance, which calls $10.57 a share in fiscal 2016, also makes its shares considerably cheap.

If it earns $10.57 for the fiscal year ending in May that would translate to an 18% earnings increase and investors would only pay 14 times those earnings for the stock compared to a forward price to earnings multiple of 17 for the S&P 500 index.

At the same time, it's likely those estimates are low and may not yet factor FedEx's $4.8 billion acquisition of Dutch shipping competitor TNT Express (TNTEY) .

When FedEx reported results for its fiscal second quarter, management affirmed its prior-stated fiscal 2016 earnings guidance of $10.40 to $10.90 a share. That the company didn't not revise it lower was a subtle vote of confidence about what it projects in terms of shipping volume for the next two quarters, which includes the all-important holiday season.

At the same time, while second-quarter revenue in its express segment did fall 6%, operating margin also increased by an impressive two percentage points, meaning FedEx is able to offset lower volume in its largest segment by improving efficiency to still generate enough profits to beat Wall Street's estimates.

So if FedEx can accelerate cost synergies and strategic benefits from the TNT Express acquisition, the company has a chance of reaching the high-end of its earnings guidance to a range of $10.75 to $10.80. This extra 2% boost in earnings would support a 2% increase in its average price target -- putting shares right around $178 in 12 months, up 21% from current levels of $147.

Buying seems like a smart move.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.