After the close on Tuesday, FedEx Corp. (FDX) put up solid numbers for its fiscal second quarter that ended Nov. 30, beating earnings estimates handily. The company also raised full-year earnings-per-share guidance from a range of $12 to $12.80 to a range of $12.70 to $13.30. FedEx cited solid demand trends, an improving global economy and its own execution for its increased guidance.
Some of the factors that drove FedEx's impressive quarter aren't specific to the company; strong demand and an improving economy should boost the competition as well. Let's compare charts to see which package delivery companies are best positioned to deliver for their shareholders in 2018.
Based on FedEx's chart, we should have guessed that an impressive earnings report was a strong possibility. After all, the stock has been overbought for most of December (shaded yellow), according to FedEx's RSI (relative strength index) indicator.
FedEx traded at all-time highs in after-hours trading last night, and is extended far above its 50-day (blue) and 200-day (red) moving averages. This is an impressive chart, but one has to wonder how much of yesterday's news was already priced into the stock.
The chart of competitor United Parcel Service Inc. (UPS) tells a very different story. UPS recently bounced from its 50-day moving average (point A), and its RSI indicator is in neutral territory (point B).
UPS could be a sleeper here. Its chart isn't telegraphing a successful quarter the way FedEx's did (UPS is scheduled to report earnings Jan. 25), and the stock hasn't had an impressive run recently.
However, the long-term trend for UPS is very solid, and the stock has significant underlying support in the form of its bullish trend line (dotted line), along with its 200-day moving average (red). Even in the unlikely event that the company has a disappointing earnings report, I don't see it breaking below that moving average, which currently rests near $112.
Another, smaller name in this sector is XPO Logistics Inc. (XPO) . With a market cap of less than $10 billion, XPO is about one-sixth the size of FedEx and one-tenth the size of UPS. This company has contracts with 10,000 owner-operators who deliver packages to its customers. (XPO is a holding of Jim Cramer's Action Alerts PLUS charitable trust.)
XPO Logistics is currently near the upper end of a bullish channel (black lines). Ideally, traders should wait for a pullback to the midpoint of the channel (blue line), which is in the low to mid $70s. This stock has been an outstanding performer, with year-to-date gains of more than 80%.
All these names could be winners in 2018. FedEx will surprise no one if it continues to perform, UPS has significant upside based on its chart, and XPO Logistics has the greatest potential of all three names.
(This commentary originally appeared on Real Money Pro at 10:00 a.m. ET on Dec. 20. Click here to learn about this dynamic market information service for active traders.)