FedEx to Deliver Value on Repurchase Program -- Ignore the Noise

NEW YORK (TheStreet) -- FedEx (FDX) will report financial results for its fiscal fourth quarter before the market opens on Wednesday, June 18.

FedEx shares are down 2% year to date, closing Monday at $139.45. I see this as a great buying opportunity for a stock that's poised to transport a 30% premium on its way to $190 in the next 12 to 18 months. My target is just $2 shy of analysts' highest price target of $192.

This premium will be fueled by a 2% to 4% annual revenue growth, which pegs full-year 2015 and 2016 revenue at around $46 billion and $47.5 billion, respectively.

Investors should also expect gross margin expansion helped by (among other things) strategic cost-cutting measures and lower fuel prices. Last but not least, FedEx has been aggressively buying back its stock, which should boost near-term and long-term earnings per share. 

Sure, earnings results over the past couple of quarters haven't been breathtaking. But management has done exactly what it has promised to do in terms of both revenue and profits.

In the March quarter, for instance, although FedEx missed estimates for both revenue and earnings, management delivered revenue of $11.3 billion, which grew 3.2% year over year, while EPS grew 9% year over year, to $1.23. Plus, over the next five years, FedEx is expected to grow earnings at a 15% annual rate, according to analysts at Raymond James.

Investors haven't been so sure, however. There are questions whether FedEx, which has always been a true leverage play on global economic growth, still has what it takes to deliver the goods.

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