4 Reasons FedEx Will Keep Delivering - Motley Fool
“A penny saved is a penny earned,” Benjamin Franklin, the nation’s first postmaster. once said — and in the wake of the U.S. Postal Services $5.5 billion pension payment default last week, his 237-year-old agency will have to save a lot pennies fast. FedEx’s (NYSE:FDX) nearly $1.5 billion annual postal services contract, which expires next September, is a great place to start.
Package delivery rival United Parcel Service (NYSE:UPS), which did about $100 million in business with the Post Office in 2011, already has thrown its hat into the ring for a shot at the lucrative air transport contract that FDX has held since 2001.
Bottom Line: The tough global economy will take a toll on UPS and FDX earnings this year, making the new Post Office contract a bigger deal for the companies than it otherwise might have been. Although FedEx could lose a piece of this contract to UPS, its strong fundamentals and pricing power still make it a good choice for investors’ portfolios now.