A Stock That Can Deliver

The Motley Fool Take

Shares of FedEx (NYSE: FDX) were recently trading 32% below their 52-week high, amid fears of a global slowdown in the economy and the threat of potential competition with Amazon.com, which has been building its own shipping service.

That sounds bad, but Amazon made up only 1.3% of FedEx’s revenue last year. FedEx has long dominated the air, but it has been steadily gaining on rival UPS in ground shipping speed. FedEx’s ground market share has steadily climbed over the last decade or so from less than 20% to more than 30%.

Right now, the company is focused on getting more efficient at handling residential e-commerce deliveries, particularly in rural areas. It just announced a deal to handle shipments for more than 8,000 pickup and delivery locations at Dollar General stores in low-population rural areas. FedEx is also expanding agreements with other major retailers such as Walgreens Boots Alliance and Walmart (which also has its own shipping fleet).

Management is cautious about business activity in the short term, but there’s plenty of opportunity to grow in the long term. FedEx will start delivering seven days a week in 2020. Plus, the company is testing the use of robots for last-mile deliveries. With a forward-looking price-to-earnings (P/E) ratio recently around 10 and a dividend yield of 1.6%, the stock is worth considering. (The Motley Fool owns shares of and has recommended FedEx.)