FedEx Corporation (FDX): Potential Upside for This Express Delivery Business

Both UPS and FedEx have strengths of their own. UPS has an efficient logistics system, partnering up with TNT Express to expand the company’s international footprint. One of the best assets for FedEx is its collaboration with U.S. Postal Service for SmartPost service. What I like about FedEx is its $1.7 billion cost-cutting program in the next three years, with a more fuel-efficient aircraft fleet, reducing Asia’s capacity and workforce reduction.

My Foolish take

UPS, with exposure to the declining economy in Europe and a much higher valuation, is not so compelling now. Among the three, FedEx seems to be a good choice for investors, because of its lowest valuation and its potential cost-reduction program, which could boost FedEx’s bottom line in the near future. Looking forward, FedEx Corporation (NYSE:FDX)’s stock price could benefit from the improvement in net profit, thanks to the cost-reduction initiatives, and the improvement in the global economy. According to Barron’s, Citigroup analyst Christian Wetherbee placed a target price of $114 for the company, a 13% premium to its current price.

The article Potential Upside for This Express Delivery Business originally appeared on Fool.com and is written by Anh Hoang.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends FedEx and United Parcel Service. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.