The market wasn't entirely surprised when FedEx (NYSE:FDX) posted a big earnings increase and a beat last quarter when it released numbers on Wednesday. The three-month period the quarter reflected - ending on the last day of May - covered a period where QE2 was still prodding the economy, while demand from overseas customers and domestic businesses continued to grow thanks to economic growth momentum, and despite higher fuel surcharges stemming from a revival of painful gas prices over the past four months. Investors don't have to stretch to understand the big progress.

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After CEO Fred Smith upped the company's full-year profit outlook to the $6.35-$6.85 range (versus analyst estimates of $6.49) and called for a 3.0% improvement in GDP in 2012, eyebrows understandably started to raise. Has Smith not seen the economic problems that have surfaced again since the fiscal quarter ended?

On the flipside, Fred Smith is more of an expert on FedEx and the transportation industry than most investors are. Therefore, Smith may be more right about FedEx's profit growth than many investors are giving him credit for. And, if he's right about shipping demand staying firm, that same demand is good news for most every name in - and every facet of - the shipping industry.

Indeed, a look at other names in the group may be the best move for investors who agree with Smith's outlook, but feel the euphoria surrounding FDX shares has left a little too much froth on the price.

Right Idea, But Wrong Stock?
While the 33% increase in yoy earnings for FedEx last quarter was solid, it was the raised outlook that really spurred traders. That same outlook on demand growth, however, could equally benefit the company's competition.

UPS (NYSE:UPS) immediately comes to mind as an ancillary beneficiary. And, it's not a bad bet, as it also offers air and ground delivery services, domestically as well as abroad. However, FedEx is a leader in an expanding company, which Fred Smith clearly expects.

Point being, UPS isn't necessarily the top alternative to FedEx in this situation. Rather, to really find a great investment in this theme, one has to look at what it was that drove FedEx to last quarter's success.

Better International Shipping Choice
One of its major advances last quarter came on the international express shipping front, which posted a 6% improvement in volume (demand from Asia was significant).

With that being the case, Air Transport Services Group (Nasdaq:ATSG) may be a higher-octane way to play the growing demand for international shipping. Air Transport Services Group does practically everything FedEx can do, and more. Better still, its shares are cheaper than FedEx's (Air Transport Services Group boasts a forward-looking P/E of 7.1), and it's been as least as consistent as FedEx on the earnings-growth front.

No Better Point-to-Point Shipping Choice?
The other standout segment was its domestic ground express shipping business, which grew revenue by 15% despite higher prices (stemming from fuel surcharges) on 6% volume growth.

While the increase is nice, higher costs via fuel surcharges may prompt consumers to start looking at alternative ground shippers. Unfortunately for investors as well as consumers, the point-to-point delivery market in the United States is pretty well limited to UPS, FedEx. Deutsche Post's service, just known as DHL in the United States, abandoned the bulk of its domestic consumer shipping business a few weeks ago, although it is in the process of rebuilding.

The Unspoken Opportunity
Though the nature of FedEx's business/persona somewhat disguises this, there's another way to play this strength in shipping if you truly believe Fred Smith's outlook points to a bigger picture demand ... intermodal cargo containers. Though FedEx doesn't handle them all that much, these giant boxes used to transport bulk goods (often in smaller boxes) are becoming mainstays for shippers. The opportunity isn't in selling them, though; it's in renting them out.

Don't laugh. Companies like Textainer Group Holdings (NYSE:TGH) and CAI International (NYSE:CAP) have seen their profits rise over the past year as demand for intermodal box rentals has soared. If Smith is right, the box-rental ATM won't stop anytime soon.

Bottom Line
FedEx's numbers may have paved the way, but it's not necessarily the final destination. There's always a better way to step into an investing theme. (Learn how this key metric is calculated and how it is used to judge market performance. Check out Earnings Forecasts: A Primer.)

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