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- CNBC’s Jim Cramer said recent declines in FedEx and FedEx Freight have created buying opportunities.
- He said FedEx’s latest quarter was misunderstood, while FedEx Freight is being pressured by typical post-spinoff weakness.
CNBC’s Jim Cramer said Wednesday that recent pullbacks in FedEx Corp and the newly independent FedEx Freight have created attractive buying opportunities. “In both cases, I think the stocks can be bought right now, right here,” the ” Mad Money ” host said. FedEx shares have fallen about 10% from their June 15 high, while FedEx Freight has experienced an even steeper decline of 27% from its peak on June 9. Cramer’s Charitable Trust , the portfolio run by CNBC’s Investing Club, owns shares of both FedEx and FedEx Freight. The Trust has continued to pick up shares throughout the stocks’ declines as Cramer thinks both have ample room for upside. FedEx Freight was spun off from its old parent company on June 1. FedEx Freight provides less-than-truckload shipping services for businesses, consisting of deliveries too big for regular parcel delivery but not big enough to require an entire trailer. The remaining FedEx handles the package delivery that brings trucks into residential neighborhoods, among other things. Cramer attributed FedEx’s drop to investors misreading the parcel delivery giant’s latest earnings report , which he called a “great set of results” with “a pretty sizable top and bottom-line beat.” He said investors are focused too heavily on FedEx’s operating margin, which came in line with expectations, arguing higher fuel surcharges made margins appear weaker because they added revenue without generating additional profit. “What’s wrong with that? Nothing,” he said. Cramer also dismissed concerns about FedEx’s full-year outlook, saying the company’s transition to a calendar-year reporting schedule following the FedEx Freight spinoff likely created confusion around Wall Street estimates. Combined with FedEx’s long history of issuing conservative guidance, he said the sell-off was overdone. “I’m not sweating either of the things that investors seemed to take issue with when FedEx reported last month,” he said. “I still think this company’s in a great position, with strong overall demand and tremendous cost initiatives.” FedEx Freight’s weakness, according to Cramer, reflects a common post-spinoff pattern, as some shareholders who received the stock simply chose to sell it. “FedEx Freight’s been getting slammed because this is what always happens right after this kind of corporate breakup,” he said. Cramer said the company’s first earnings report as an independent business was unusual, but better than the market gave it credit for. Revenue and operating income both topped expectations, while margins faced the same fuel surcharge dynamic that weighed on FedEx’s results. His investment thesis, however, extends well beyond the company’s first quarter as a standalone business. “I want to own this one for the long haul,” Cramer said, arguing FedEx Freight’s position as the largest player in the North American less-than-truckload market and its dedicated management team should allow it to benefit as the freight industry recovers from a multiyear downturn. “Here’s the bottom line: while FedEx and FedEx Freight have pulled back over past few weeks, I’m viewing these declines as buying opportunities,” he said. Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market. Disclaimer Questions for Cramer? Call Cramer: 1-800-743-CNBC Want to take a deep dive into Cramer’s world? Hit him up! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com
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