The big winner of earnings…
We expected big things from FedEx, but never this big…
We’ve seen several businesses struggle through the pandemic. But after recent earnings, it’s clear to assume that FedEx isn’t one of them.
On Tuesday, FedEx reported first-quarter results, and they blew expectations out of the water as e-commerce business boomed thanks to the stay at home order. FedEx reported earnings of $4.87 per share delivering $19.3 billion in revenue, efficiently bypassing the $2.69 per share in earnings on sales of $17.6 billion that analysts predicted.
Now, as I stated earlier, FedEx has seen a surge in business due to the pandemic. But on top of this, the delivery company also saw strong volume growth in international priority shipping due to a fall in competition as passenger airlines cut their international routes.
Where’s the money?
This earnings report was impressive, no doubt. But many investors wondered if FedEx could keep up this kind of momentum. But the delivery giant had the answer investors were looking for. The company is expecting the volume to not only sustain – but continue to grow as it is predicting the busiest holiday season that it has ever seen.
After a miserable 2019 performance due to growing pains, this surge in business was well welcomed. And investors are feeling the good energy surrounding this company as they rush to get a piece of the lucrative future.
And here’s my thought on that…
How can I get some?
It’s no surprise to see FedEx doing so well. With the pandemic it left many people not able to leave the house, which led to an uptick in online shopping. This uptick, combined with the already struggling brick and mortar sector, was the perfect setup for a delivery business.
And I, for one, believe the company’s prediction that business will continue to boom over the remainder of the year.
But I won’t be one of those investors chasing this hot shot stock just yet. You see, right now, we see a rush of volume come into the stock, but as you know, buying a stock on its highs is never good for your trading game.
That’s why, when it comes to buying this stock, I’ll personally be waiting to see a pullback – and I’m going to throw AMZN on the list as well as the company continues to buy up planes to increase their delivery service potential.
So, when it comes to playing the delivery boom – patience is key. And the moment you see a pullback, that’s the time to make your move.
There’s Always a “But”
While Fedex’s recent earnings report and future prospects look very good, there are always other factors to consider.
I’ve said this before, but it’s easy to be persuaded by a flashy headline or a positive earnings snapshot to jump into a stock too quickly.
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In the spotlight: The Kodak bounce back.
It wasn’t too long ago that we saw Kodak’s stock hit surprising highs. The reason why? Back in July, the company received a $765 million loan via the Defense Production Act. The loan was given to Kodak to help push the manufacturing of generic drugs. However, in August, the government decided to halt the loan when whispers of insider trading hit the scene.
And once the loan was halted, the stock sank like a rock. But Kodak was looking for redemption. A special Kodak committee brought in a law firm to review the share purchase and options grants to company insiders.
After a thorough investigation, the committee announced that while Kodak did what they considered a sub-par job in corporate governance matters, there were no real violations of the law.
This was enough for investors too. Shares of Kodak popped more than 42% after the announcement was made as a wave of volume hit the stock. Now, I’m not going to jump into this stock just because the rest of the market is – but I’ll be keeping a close eye on this one to see where it heads next. And I’ll be sure to keep you updated.