FedEx Corporation (NYSE:FDX) is currently sold at about $154 per share and its close to an all-time high if it continues in the same manner for even a short period. However, there are serious concerns regarding the future prices of its stock, according to Jim Cramer on CNBC.
FedEx Corporation (NYSE:FDX)’s price has taken an upwards trend due to a massive drop in crude oil prices, which are expected to go even lower in the near future. Bullish investors see this as a possibility for the company to boost its value even further and it’s a currently cheap stock due to several reasons. It has a price-to-book at around 2.7, a price-to-sales of approximately 0.9 and its enterprise value, amounting slightly above $45 billion, is more than the market capitalization, which is about $43.76 billion. But, for many, these numbers are not enough.
“Citi raises numbers on FedEx, it being a great promoter of worldwide trade. The transports are driving this market, some of it’s gasoline, but they take numbers to $2.01, that’s up from $1.91. Watch that stock, it’s a great promoter of what’s going on underneath this market,” said Jim Cramer.
Bearish beliefs towards FedEx Corporation (FDX) express disbeliefs that the narrow profit margins currently held by the company will allow it to overcome a spike in oil prices. They also draw attention to the fact that FedEx Corporation (FDX)’s price to earnings ratio is 22.71, but growth projections are around the mid-single-digits, which doesn’t loot that promising. Moreover, the company is facing accusations of shipping drugs, which might inflict wounds in the budget, if the fine of over $1.5 billion dollars is applied to the case.
If FedEx Corporation (NYSE:FDX) manages to push prices even higher, taking advantage of the current market growth, we’ll be witnessing a race towards the top in a counter-trend style. The situation might prove particularly unstable if prices will revert to the expected trend, that is, they willl eventually plummet to a more stable level, at about $140 – $145 per share. As a conclusion risk lovers are asked to be careful with this stock.