3 Top Air Freight Stocks To Watch In September 2020
It’s been an interesting year for air freight stocks. The novel coronavirus may have brought all the top airline stocks down to their knees. But that doesn’t mean it will stop global shipments. No matter what, trade still has to keep happening to keep the world going, right? Granted, there were temporary disruptions that negatively affected the businesses of air freight and cargo companies during the start of the coronavirus pandemic. But those were thankfully short-lived.
Also, remember there were shortages of personal protective equipment (PPE) earlier this year, and even now in some places. The surge in PPE shipment across the Atlantic has also boosted the earnings for the major air freight stocks in the market. Airfreight capacity, for instance, is down because fewer commercial airplanes are flying. But that doesn’t stop these air freight stocks from shipping on behalf of their clients. In fact, since these major air freight stocks have their own fleet of planes, business still goes on as usual, if not better. The rise in e-commerce during the pandemic also benefits air freight stocks. That said, now that some of these air freight stocks are climbing to their all-time highs, is it still worth the risks?
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Top Air Freight Stocks To Watch In 2020: FedEx Corporation
Shares of shipping giant FedEx (FDX Stock Report) are trading 10% higher during pre-market trading on Wednesday. This comes after the company reported $4.87 in per-share earnings for the first quarter of the fiscal year 2021 from $19 billion in sales. No doubt, it was a smashing quarter, bypassing even the highest earnings estimates on Wall Street. This comes after price hikes, lower fuel costs, and efficiency gains countered negative impacts associated with a pandemic-fueled surge in e-commerce shipments.
Recall that it was only a few months ago when FDX posted a terrible quarterly result late last year. Oh, how quickly things have changed, Their blowout quarter has certainly caught many by surprise. The company did not provide an earnings forecast for fiscal 2021, citing continued uncertainty from the coronavirus pandemic.
However, it expects annual capital spending of $5.1 billion, above analysts’ average estimate of $4.96 billion, according to Refinitiv data. FedEx has been seeing rising shipping volumes and lower operational costs thanks to automated sorting centers and route optimization. With these in mind, could investors expect FDX stock to continue to climb in the near-mid term?
Top Air Freight Stocks To Watch In 2020: United Parcel Services
Shares of United Parcel Services (UPS Stock Report) have soared to a new all-time high. This came as its businesses-to-consumer (B2C) revenues surge in lockstep with a boom in e-commerce. The company has proved that it can still achieve strong growth despite the pandemic. Now that UPS has become the largest airfreight stock by market capitalization, investors appear to be optimistic that UPS will continue to thrive.
The surge in e-commerce from the COVID-19 pandemic couldn’t come at a better time. This is because the company just launched the UPS Digital Access Program last year. To help with the growth in its B2C segment, the program offers small and medium-sized businesses (SMBs) discounted shipping rates and logistics solutions.
This program played a pivotal role in helping UPS add 120,000 new SMB accounts in the second quarter. Thanks to this, U.S. B2C sales for the period saw a 65.2% increase. This also helped the company increase earnings by 8.6%, which is a respectable figure when many companies are in worse shape.
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Top Air Freight Stocks To Watch In 2020: Amazon
You might be surprised why Amazon (AMZN Stock Report) is in the list of air freight stocks to watch. While its strengths lie in e-commerce and cloud services, the company’s air freight business has rapidly accelerated in recent months. Between May and July, Amazon added nine planes to its Amazon Air fleet. That is “the most it has added over a three-month span since its inception,” according to a report issued by DePaul University’s Chaddick Institute for Metropolitan Development.
Many experts believe Amazon’s air fleet, combined with its massive network of other modes of transportation, could one day position it to rival UPS and FedEx. While its fleet has grown since May, Amazon Air only has around 70 planes. That is still much smaller than its rivals FedEx, which operates 463 planes and UPS’s fleet of 275 planes.
The scalability of Amazon’s transportation and logistics services would probably not be a major issue, with enough time. After all, Amazon’s enormous balance sheet and integration with the rest of its business could make its air fleet a force to be reckoned with in the not too distant future.