What's Happening
Shipping giant FedEx ( FDX ) will report its fiscal second-quarter numbers December 19. The company will report its numbers after the market close, with the consensus calling for earnings of $2.86 per share, up from $2.80 during the same period last year. FDX shares are up 28.2% on the year.
Technical Analysis
FDX was recently trading at $240.62, down $2.86 from its 12-month high and $57.73 above its 12-month low. Overall technical indicators for FDX are bullish and the stock is in a strong upward trend. The stock has recent support above $226.25, and recent resistance below $243.50. Of the 19 analysts who cover the stock, 14 rate it a "strong buy", one rates it a "buy", and four rate it a "hold". FDX gets a score of 77 from InvestorsObserver's Stock Score Report.
Analyst's Thoughts
Improvements in the overall economy have helped drive FDX in recent years. Over the last five years, the company has grown earnings on average by 19.1%, and looking ahead analysts forecast earnings growth of 12.0% per annum for the next five years. A strong economy, in particular a strong jobs market, leads to increased consumer spending, and with consumers doing more and more shopping online, FedEx has enjoyed nice demand for its services. The stock has trended steadily higher over the last six months, and if the company is able to top estimates for its second-quarter the stock should manage to build on its recent gains. The street expects a solid report, with a whisper number of $2.90, three pennies above the consensus. Look for a strong quarter, and FDX to close out the year near its 52-week high.
Stock Only Trade
If you're looking to establish a long stock position in FDX, consider buying the stock under $240.50. Sell if it falls below $216.00 or take profits if it gets to $276.50.Bullish Trade
If you want a bullish hedged trade on the stock, consider an April 190/195 bull-put credit spread for a 30-cent credit. That's a potential 6.4% return (18.5% annualized*) and the stock would have to fall 18.8% to cause a problem.
Bearish Trade
If you want to take a bearish stance on the stock at this time, consider an April 280/290 bear-call credit spread for a $0.55 credit. That's a potential 5.8% return (16.9% annualized*) and the stock would have to rise 16.6% to cause a problem.
Covered Call Trade
If you like the stock, but wish to lower your cost basis on a new position, you may want to consider a April $240.00 covered call. Buy FDX shares (typically 100 shares, scale as appropriate), while selling the April $240.00 call for a debit of $227.80 per share. The trade has a target assigned return of 5.3%, and a target annualized return of 15.6% (for comparison purposes only).The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Originally published on InvestorsObserver.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
