Tuesday, February 21, 2006

Fed Ex En Fuego

FedEx (FDX) is an indisputable leader in the global business-to-business express delivery space.

The firm is aggressively expanding, cutting costs, and doing just about everything a strong operation is supposed to be doing to improve profitability.

That must explain why the stock hit a 52 week high on Tuesday.

Although UPS (UPS) is less leveraged to the air cargo & freight business (which demands higher Cap Ex and fluctuates accordingly with fuel spikes), it's clear that investors are optimistic about Fed Ex's ability to compete with its long time arch-nemesis, even as the latter sustains its higher margin categories and keeps the European market on lock-down.

In any event, Fed Ex's chart looks better, corroborating our feeling that stronger bullish sentiment exists among the Fed Ex crowd and that there is less upside in UPS.

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