Expeditors International of Washington (Nasdaq: EXPD) is a transportation company that provides logistics services all over the globe. The company offers airfreight and ocean freight services, freight consolidation services, order management, and customs brokerage.
The company’s client roster includes retailers, wholesalers, electronics companies, and industrial and manufacturing companies.
EXPD saw solid growth in the most recent quarter.
Earnings grew by 16% as did sales.
Analysts are predicting earnings growth of 16.5% for this year.
The company sports a return on equity of 23.5%, a profit margin of 10.4%, and an operating margin of 10.1%.
Despite the solid fundamental performance and outlook, there is considerable bearish sentiment toward EXPD.
The short interest ratio is currently at 8.98, meaning nearly nine days of average volume are sold short. If the stock continues to rally, which I think it will, these short sellers can add buying pressure as they have to cover their short positions.
In addition to the high short interest, analysts are less than enthusiastic about the stock. Of the 14 covering the stock, only two have the stock rated as a “buy” while nine have it rated as a “hold” and three have it rated as a “sell”.
The weekly chart for EXPD shows how the stock has been moving steadily higher within a trend channel. The channel goes back to the beginning of 2016 and the stock is just above the lower rail at this time. Even with the recent increase in volatility for the overall market, the stock has remained above its 52-week moving average. The good news is that the recent market volatility has allowed the weekly oscillators to drop out of overbought territory and are now at their lowest levels since last August.
Suggested strategy: Buy EXPD with a maximum entry price of $63. I would set a target of at least $75 over the next six to nine months (for a potential return of over 20% from current prices). I would suggest a stop loss at the $57 level.
— Rick Pendergraft