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3 Reasons It's The Best Time In 10 Years To Buy FedEx by Brad Thomas

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Summary

  • The horrible 2020 results are due to short-term factors.
  • FedEx has a long and strong growth runway ahead of it.
  • Attractive valuation during a down year is precisely when you want to buy cyclical companies like these.
  • Looking for a portfolio of ideas like this one? Members of iREIT on Alpha get exclusive access to our model portfolio. Get started today »

We maintain a buy rating on shares on Monmouth Real Estate (MNR), an industrial REIT with outsized exposure to FedEx (FDX). Given the fact that this REIT has a significant amount of revenue from FedEx (59.6% based on Annual Rent and 48.0% based on Square Footage) we decided that we would take a closer look at the shipping giant.

Fortunately, my colleague, Dividend Sensei, on Dividend Kings, has put together an extensive research report on FedEx, a company that Dividend Kings has bought four times in the Deep Value Blue Chip portfolio.

(Source: F.A.S.T Graphs, FactSet Research)

Besides us, FedEx has gotten several buy recommendations including:

From Barron's

Jeff Miller (who bought it two weeks ago for his client's accounts)

Chuck Carnevale

Why? Because this is a fast-growing, competently run cyclical company that's experiencing an industry downturn that has caused its valuation to collapse to the most attractive level in a decade.

(Source: F.A.S.T Graphs, FactSet Research)

Anyone whose ever been interested in FedEx should be considering starting or adding to their position today. In fact, there are three reasons why I consider FedEx a "good buy" right now, and from its 16% undervaluation, it's likely to deliver strong market-beating long-term total returns.

All while paying an above-average safe dividend that's likely to grow two to three times faster than the dividends of the broader market.

Reason 1: The Horrible 2020 Results Are Due To Short-Term Factors

(Source: Seeking Alpha)

FedEx has been having a rough 2019, missing earnings expectations in three of the last four quarters. That's due to the cyclical nature of its business as well as a $5.9 billion investment program that it's undergoing to improve efficiency and global delivery capacity.

...Originally Posted On Seeking Alpha

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