Value stocks were in focus earlier this year as investors rotated away from expensive growth stocks. While the fast-paced economic recovery and the low interest rate environment are helping growth stocks attract investors’ attention again, quality value stocks may have more room to run in the coming months. Investors’ interest in value stocks is evidenced by the SPDR Portfolio S&P 500 Value ETF’s (SPYV) and the Vanguard Value Index Fund ETF Shares’ (VTV) 14.9% and 15.5% respective year-to-date returns.
Even though the stock market has been volatile amid high inflation concerns, Wall Street closed the first half of 2021 at record highs. This has led to most stocks, including some fundamentally weak ones, to trade at lofty valuations. Some quality stocks are still trading at reasonable valuations, however.
We think FedEx Corporation (FDX – Get Rating), Dell Technologies Inc. (DELL – Get Rating), General Dynamics Corporation (GD – Get Rating), and Cognizant Technology Solutions Corporation (CTSH – Get Rating) hold immense growth potential, but their shares are currently trading at discounts to their peers. Our proprietary POWR Ratings system has rated these stocks Buy. So, it could be wise to bet on them now.
One of the top delivery services companies, FDX provides transportation, e-commerce, and business services worldwide. The company’s segments include FedEx Express, TNT Express, FedEx Ground, FedEx Freight and FedEx Services. FedEx is based in Memphis, Tenn.
In mid-June, FDX and Nuro announced a multi-year, multi-phase agreement to test Nuro’s next-generation autonomous delivery vehicle within the company’s operations. Rebecca Yeung, FDX’s vice president, advanced technology and innovation said, “We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations.”
FDX’s revenue increased 29.9% year-over-year to $22.60 billion for the first quarter ended May 31, 2021. Its non-GAAP operating income grew 117.2% year-over-year to $1.97 billion, while its non-GAAP net income increased 105.1% year-over-year to $1.36 billion. Also, its non-GAAP EPS came in at $5.01, up 98% year-over-year.
In terms of forward P/CF, FDX’s 7.77x is 50.3% lower than the 15.65x industry average. In terms of forward P/S, the stock’s 0.86x is 45.5% lower than the 1.58x industry average.
Analysts expect FDX’s EPS and revenue to increase 17% and 8.4%, respectively, year-over-year to $21.26 and $91.02 billion in 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 88.5% over the past year to close yesterday’s trading session at $294.61.
It’s no surprise that FDX has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Value, Quality, and Sentiment. Click here to see FDX’s ratings for Growth, Stability, and Momentum as well.
FDX is ranked #4 of 16 stocks in the A-rated Air Freight & Shipping Services industry.
As one of the world’s leading technology companies, DELL designs, develops, manufactures, markets, sells, and supports information technology solutions, products, and services worldwide. It operates through two segments: Client Solutions and Enterprise Solutions Group (ESG). The company announced the planned spin-off of its 81% equity ownership interest in VMware (VMW) on April 14, 2021. Dell is based in Round Rock, Tex.
In May, DELL announced an expanded collaboration with global digital infrastructure company Equinix, Inc. (EQIX) to broaden the availability of its APEX via EQIX’s International Business Exchange data centers. This move is…
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