(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Shares of FedEx Corp. (FDX) have increased by nearly 25% over the past year, easily topping the S&P 500’s rise of 14%. But most of the significant gains came in 2017 because shares have only climbed by 3.6% in 2018, primarily in line with the broader S&P 500. The stock may be about to takeoff and return to its previous highs of early January, a jump of about 7% to $275, based on the technical charts. 

Analysts are looking for shares of FedEx to rise even higher, climbing by 11.5% to an average analyst price target of $287, from its closing price of around $257.20 on Thursday. The optimism for the stock comes on a strong outlook for the business which is expected to see revenue rise by 6%, while earnings are seen jumping by 15.5% in fiscal 2019

FDX Chart

FDX data by YCharts

FedEx Break Out

FedEx shares appear to have broken out, rising above a technical resistance level at $255.50, and that breakout is what may trigger the stock's rise back to its all-time highs around $275. The technical pattern in the chart is called a rising triangle, and that is a bullish continuation pattern. The stock has attempted to break out above resistance at $255.50 on many occasions in the past and has been unsuccessful thus far in 2018. But on June 6, shares managed to rise above that technical resistance level. That resistance level should now act as an area of technical support.

 

Strong Growth

The company is expected to report fiscal fourth-quarter results on June 19, and analysts are looking for the company to say the quarterly earnings grew by 33.8% to $5.69 per share, while revenue is seen jumping by nearly 9.5% to $17.2 billion. But the significant growth numbers are expected to continue into fiscal 2019, with earnings seen jumping by 15.5% to $17.42 per share, while revenue is expected to climb by 6% to $69.2 billion. 

Low Valuation

Fundamental Chart Chart

Fundamental Chart data by YCharts

The stock's valuation comes at the lower end of its historical range, at just 12.8 times fiscal 2020 earnings estimates of $20.11. The low valuation and solid growth prospects are likely why analysts see shares of the stock climbing to a record high of $287 per share, about 11.6% higher than the stock's price closing price on Thursday. Of the 29 analysts covering the stock nearly 81% of them rate shares a buy or outperform

FedEx stock appears to be ready to takeoff, and if the outlook for the business remains strong, the stock may be on its way back to its all-time highs and higher. 

Michael Kramer is the founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.