Global Recovery Points to Strong Logistics Returns

The pandemic’s effect on the economy can be measured in many ways. One simple way to track its effects is by looking at the level of global commerce. A number of companies can provide a one-stop look at this information as they report earnings.

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  • That may be why shipping companies like UPS (UPS) and FedEx (FDX) have been in rally mode the past few months. They reflect a hot economy.

    Both companies are also getting analyst upgrades ahead of their next earnings report. That also comes on the back of improving jobs numbers, strong GDP data, and a rise in global commerce that may get back to 2019 levels as soon as the end of the year.

    Action to take: Both these companies look like good investments, as they can also raise prices to deal with inflationary pressures. Both are excellent buys, but FedEx may have a slight edge here.

    With a 183 percent jump in earnings in the past year, shares are only at 15 times forward earnings estimates, giving the company a balance between growth and value. Investors may like shares here, although the stock only pays a modest 0.9 percent dividend yield.

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  • For traders, the August $310 calls, going for just under $17, can likely provide mid-to-high double-digit returns, particularly if the company beats on earnings when it reports next month.

     

    Disclosure: The author of this article has no positions in the stock mentioned here, but may make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.