The leading gurus on Wall Street are currently busy trying to explain the meaning of the stock’s recent behavior, especially in light of the dire forecasts for further declines, which almost all of them have given even since the low point of late September. The truth is that the increases of the last month, despite the decreases in the last few days against the background of the disappointment from the reports of the tech giants, are surprising in their strength, especially the Russell, where the increase shows that it is a very wide variety of investors.
The experts are currently at the stage of “trying to explain why the shares did not continue to fall and what will happen next?” The podcast released by Morgan Stanley’s chief investment officer and global strategist on Wednesday is a typical example, “As stocks enjoy their best week since the summer peak in June,” he says, “investors appear to be at the mercy of strong market trends that raise the question of ‘when might these trends change? On the negative side?”. An excellent and common question for all the experts who, like Wilson, present all the concerns of the signs that point to problems that continue to accumulate. The truth is that there are indeed many problems led by inflation, interest rates, dangers from China and Russia and more, most of which are still hovering over the stock market, but solving the question of the increases by claiming that the public is wrong is a mistake and it could very well be that the “wisdom of the crowd” is right again.
If the stock prices were still at the highs of 2021 then there is no doubt that in the current atmosphere the investor should have run away from the stocks even from those that are supposedly “immune to recession”. But at today’s price levels things are different. There is the site triple who analyzes stocks and is rich in different opinions and who in many cases, from our experience, evaluates stocks better than the consensus and recently, in more and more stocks, the website shows that the current value of the stock is much higher than its value in the stock market and we have not seen such a thing for many years. Almost all the stocks that published third quarter reports recently are in such a situation, in some the gap is extremely impressive.
Today we write about the shipping and logistics industry and present the FDX as an example. Note that the current consensus on the future target price of FDX Today it is at 206.8, 33% above the share price but on the website triple-It is claimed that the value the current of the stock is 235 dollars.
If you check all the leading companies that have already published reports then FDX is not the exception in the high premium that the site provides for her. dOur time is that, considering the levels of share prices in the last 2-3 months compared to all the concerns, investors’ appetite is increasing and it is time to collect. Yes, declines will return, but we still believe that all the non-economic factors causing concerns, especially from China and Russia will disappear because Putin and Xi understand very well who will suffer more.
The shares of the transportation and logistics industry suffered a serious blow (the industry itself did not!), have there been any investment opportunities as a result, FDX as an example? What happened to the shares of the shipping and logistics industry, especially toFedEx Corporation (symbol:FDX), since the 2021 records, amazing. The blow they took is not at all proportional compared to the situation in the industry itself. In addition to the fear of a recession that raised concerns about the continuation of growth, “external” events such as the Ukraine war, the policy of zero corona in China, the American sanctions on the Chinese chip industry and especially the breakdowns in the supply chains were added, whichIndustrial stocks were hit hard And this in front of an industry that in practice was harmed very little.
The transportation and logistics industry began to develop in the British Army in World War I and was not used by private businesses until after World War II. With the dramatic increase in globalization and thanks to technology and modern transportation, shipping and logistics services have become a necessary need of the business world, a need that is growing as the technology revolution progresses. During the 1980s, businesses began using computers to handle their logistics and shipping procedures.
The invention of the personal computer and then the Internet improved logistics processes and today’s shipping and logistics industry relies heavily on technology that allows businesses to plan, track and organize their shipments with a few mouse clicks. The advancement of technology has allowed businesses to manage their supply chain and delivery processes efficiently and thus was born supply chain management, handling the entire flow of a product or service. A supply chain manager follows the movement of the product, from its beginning as raw ingredients to its end in front of consumers.
The situation today is that the business world needs efficient shipping and logistics services in order to succeed. Shipping and logistics companies must therefore be familiar with all stages of transportation, the supply chain and logistics and are committed to constantly developing strategies to optimize shipping processes. This is a huge global industry that is growing rapidly and regardless of all the experts, recession or no recession, the growth will continue.
The transportation and logistics industry that we know today allows businesses to send their products anywhere around the world using fast and efficient shipping processes and as technology continues to grow in the coming years, the efficiency of the industry will improve when both the various transportation industries and logistics will be disrupted through new technologies such as autonomous vehicles, artificial intelligence, systems Cloud-based, machine learning, blockchain technologies, Internet of Things (IoT), big data and more.
This industry’s big break began in 2009, the year the fusion of technological innovation into the 20th century economy began and the great disruption began. In 2009, this industry generated a global turnover of less than a trillion dollars, when in 2019 it reached 6 trillion and in 2021 to 8.43 trillion. The estimate for 2022 is 10.41 trillion and within 5 years, in 2027, the turnover will reach “between 14 and 16 trillion”, with China and the USA responsible for over 50% of the turnover.
This industry, in our opinion, faithfully represents the impact of the technology revolution on the global economy and what has happened and is happening to its stocks perfectly explains the vicissitudes that are going through the behavior of investors on Wall Street, especially since 2009 and for that we will useFDX as an example.
FedEx Corporation (symbol:FDX) as a representative example: We note that what is true about FDX Similar to what all the competitors went through, the leading among them are: UPS, DHL, CHRW, JBHT, XPO and their like. Some companies rely more on logistics and others more on shipping.
stock FDX fell, within 9 trading days and following the publication of the third quarter reports and after announcing the cancellation of the forecasts, from 214 to 142, by 34% and this is a stock that in May 2021 reached its all-time high, $320 mainly due to its involvement in the rapidly growing e-commerce shipments. It is true that the last quarter showed a decrease in revenues and a strong decrease in operating profit, but the cancellation of the guidelines for 2023 greatly alarmed the investors and especially the analysts who during 2020-21 sent the stock up with buy recommendations (mainly due to the future of the industry).
During 2020-21 there were 20 analysts recommending buy and 4Hold. 10 analysts published estimates on the company since it published the results of the last quarter, on 14.9, 8 of them inHold and two in “Kenya”. That is, after the stock fell by 56% between May 2021 and the publication of the latest reports on September 14.
Most analysts recommendHold When the main argument for continuing the recommendation of theHold It is the fear of a recession and some of the problems in the supply chain. The consensus right now is that this year’s earnings per share will fall by 29% and next year will rise by 25%. stock FDX Traded these days at a multiplier of 11.5. This is the picture, more or less, in all industrial stocks, even if it is a stock FDX Kidnapped more.
In the 20th century, investing in its shares was considered a solid and stable investment, a fusion of growth and profitability, suitable for the solid investor. At that time, it was a rather “boring” company, with operating and net profitability that increases every year, as well as the earnings per share and dividend payments, a company that veterans define as a “stable income and growth company”.
But since the beginning of the century and even though in terms of business the company continued with similar performances, the stock began to behave more and more like a technology stock, wildly. The company started the century with revenues and net profit of 19.6 billion and 584 million dollars or 1.99 dollars per share and with a share price of 36 dollars and excluding the years 2009-10, in which it showed a slight decrease in revenues as a result of the crisis, the company continued to behave as a “stable income and growth company” “. Throughout 2005, for example, the stock lost close to 20%, despite the fact that its business results showed no sign of a crisis. Go to the report to the authority of 2006, check 2004-5-6 page 36 of the report. Why, then, did the stock drop?
Because at the beginning of the summer of 2005, the company announced that the fuel costs that have been rising since the beginning of that year and the resulting pricing pressure could, in its estimation, lower its profits in 2006 below the consensus of Wall Street analysts. It didn’t happen but the positive consensus at the beginning of that year quickly turned around. “It seems strange (the decline in the stock),” she wrote at the time Corey Hajimthe LinkedIn business manager and economic commentator b CNN“Air cargo traffic is expected to triple over the next 20 years and FedEx’s aggressive expansion into Asia is setting the stage for taking advantage of the continent’s booming economy. Meanwhile, the company has tripled its cash per share in three years and profit margins have grown.
stock FedEx is now trading,” the lady added, “according to a historical multiplier of only 16 which is below the 500 average P&S“. Within 7 months the stock increases by 50%. Please check the attached 2006 reports and see what actually happened. Did anything unusual happen to the company between 2005 and 2006? Nothing, nothing. Starting in 2005 and while the company’s business continues to grow handsomely and more or less constant and in accordance with its forecasts, the stock continues to “go crazy”. In the 2018 correction, for example, the stock falls by 40% and within 8 months after that, the stock rises by 180%. What led to the frenzy of 2018-19? The fear of another recession, of interest rate increases and damage to pricing again .
From the end of 2020, the stock goes to a real roller coaster. From November 2020 until the end of January 2021, it decreases by 20% and from there, within 3 months, it increases by 36% to an all-time high and from there, starting from mid-May 2021, the deterioration begins until the level of 142 dollars in September 2022 and since then it rises again. Why the descents all along the way? Fears of a recession, a decrease in profitability as a result of an increase in fuel costs. Why the increases? Because so far, in all cases, the concerns were significantly inflated and did not materialize.
The situation at the moment is that more and more investors believe, in light of the facts that are being published (from the profitability of the companies to the macro data) that the Fed, as it did during 2019, has a strategy (perhaps), that the Great Recession is in doubt (perhaps), that the supply chain is operating again and that the black swans, the Chinese and the Russians, will disappear. That is, in the case of the shipping and logistics stocks, FDX and its competitors (UPS, DHL, XPO and others), just as it happens in the other fields, will return to grow and prosper. If you ask any transportation expert today and in fact any sensible person about the state of this industry the answer will resemble the answer he gave Corey Hajim in 2005.
There are no shipping and logistics focused baskets and it is recommended to check the leading companies as viable for investment.