Two Ways To Play: FedEx Delivers Bad News
Strengthen your portfolio in good times and bad.
FedEx (FDX) cut its 4Q forecasts late Friday. According to Reuters, the package-shipping giant said it now expects earnings of $1.45 to $1.50 per share vs. its prior guidance of $1.60 to $1.80 per share. CFO Alan Graf said while the company has fuel surcharges in place, it can't keep up with rising fuel prices in the short term. Since it made its forecast in March, estimated fuel costs for the period have risen by 7%, or $100 mln. See related article, Oil Eyes Near-Impossible Heights by Professor Charles Payne.
From the Bull Pen: Bulls might look elsewhere like Ctrip.com (CTRP) for an upside play. Professor Ryan Krueger positively mentioned this ticket-booking company last week. Entry might be near the $60 level.
From the Bear Cave: FedEx said the new forecast assumes no additional prices increases and no further weakening of the economy. Those bearish can now use prior support ($90) as resistance on downside attempts.
Shipbuilders Face Major Headwinds
According to Bloomberg, the shipbuilding industry has experienced its largest boom in history, but stress in the credit markets may lead to as much as $14 bln in cancellations or delays in ship orders. Tighter credit standards mean lenders demand shorter terms and larger deposits for financing which could make it difficult for companies like DryShips (DRYS) and Genco Shipping (GNK) to expand their fleets. The industry faces a loss of about 250 cargo ships, or 10 percent of orders which could decrease supply and raise shipping rates. See Professor Fil Zucchi's Navios Maritime Poised For Growth.
From the Bull Pen: Professor Zucchi positively mentioned Navios Maritime (NM). Bulls can test the upside with sell-stops near $12.35.
From the Bear Cave: Bears can test the downside in DRYS should the stock approach $100. Buy-stops can be set above that level.
For more ideas, check out Minyanville's Spotlight Stocks.
Quick Check Around the World
Rain is falling on the Street this morning, but foreign markets are looking a less gloomy green.
Asian trading closed with the Nikkei +0.64%, Sensex +0.74%, Taiwan +0.43% and Shanghai +0.37%.
A quick check of Europe finds the CAC +0.67%, DAX +0.47%, FTSE +0.50
As of 8:30 AM EST, S&P futures are up +2 points to 1391, and Nasdasq Futures are higher +2.5 points to 1965.
A Look At Commodities
Commodities are lower. Crude oil is down -1.37 to 124.58. Gold is lower -4.70 to 881.10. Copper is down -1.05 to 374.30, but silver is up +0.049 to 16.843.
The dollar index is higher +0.173 to 73.227.
On the Radar
2:00 Monthly Budget Statement: $160.0 bln.
Click here to see the full trading radar.
Happy Monday! Good luck!
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