Pro explains why FedEx shares are worth owning amidst macro headwinds

FedEx Corporation (NYSE: FDX) is trading at deep discount versus peers, which makes the stock worth owning here, says Elizabeth Evans. She’s a Managing Partner at Evans May Wealth.

FedEx shares have more upside

FedEx shares have bounced more than 15% off their year-to-date low but Evans is convinced the stock has a lot more room to run. Speaking with CNBC’s Wilfred Frost on “Worldwide Exchange”, she said:

FedEx is trading at a 42% discount to UPS. [It] has secular tailwinds that should help overcome some of the macroeconomic headwinds. Under the new CEO, FedEx will continue to benefit from leveraging their pricing power and better efficiencies.

The Memphis-headquartered transport company in June said it was targeting annualised total shareholder return of up to 22% through fiscal 2025 as it lifted its quarterly dividend by over 50% to $1.15 a share.

Industry trends look promising

Earlier this week, peer United Parcel Service reported market-beating results for its fiscal Q2 and Evans expects the same strength to reflect in FedEx as it reports its current quarter results in September.

You heard it from UPS; there’s a movement away from volume growth to maximizing price, maximizing yield, which should help operating margins. I think that we will see the same out of FedEx Corporation.

FedEx shares benefitted greatly over the past two years as the COVID pandemic accelerated the shift to eCommerce – a trend that Evans believes is here to stay. Wall Street currently has a consensus “overweight” rating on FDX with upside to $292 (25% upside from here) on average.