We're buying more shares of a recent spin-off that has great long-term prospects
We're buying more shares of a recent spin-off that has great long-term prospects. The company in question is FedEx Freight, a spin-out from FedEx that specializes in the less-than-truckload (LTL) market. This market caters to companies that have bulky shipments in need of transport, which are too large for regular parcel delivery but not large enough to require an entire 18-wheeler trailer. As a result, we're purchasing 80 shares of FedEx Freight at roughly $148. Following this trade, Jim Cramer's Charitable Trust will own 550 shares of FDXF, increasing its weighting in the portfolio to 2% from 1.7%.
Investment Strategy
We're picking up more FedEx Freight as shares dip on Friday, a move that was anticipated after the company reported a noisy quarter back in June. This is typical of companies that were spun out, and FDXF has pulled back from its post-spin high of about $188. However, revenue and adjusted operating income in the quarter were better than what Street analysts expected. We expect earnings to grow in the upcoming years as management executes on its self-help and rationalization initiatives. With better focus, we expect Freight to improve volumes, increase revenue per shipment (yield), and drive cost efficiencies to expand margins in the quarters ahead.
The company's earnings should also benefit from a better freight cycle, which has shown signs of improvement after a brutal multiyear recession that began in 2022. As a subscriber to the CNBC Investing Club with Jim Cramer, investors will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. This information is subject to the terms and conditions and privacy policy, together with the disclaimer. No fiduciary obligation or duty exists, or is created, by virtue of receiving any information provided in connection with the Investing Club.
Market Outlook
The recent performance of FedEx Freight since its spin-off on June 1, 2026, has been closely watched by investors. Despite the stock hitting a rough patch, the company's long-term prospects remain promising. With the freight cycle showing signs of improvement, FedEx Freight is well-positioned to benefit from the expected growth in the industry. As the company executes on its self-help and rationalization initiatives, we expect to see improvements in volumes, revenue per shipment, and cost efficiencies. These factors should contribute to the expansion of margins in the quarters ahead, making FedEx Freight an attractive investment opportunity.
As Jim Cramer's Charitable Trust increases its stake in FedEx Freight, it's clear that the company's potential for long-term growth is being recognized. With the trust now owning 550 shares of FDXF, the weighting in the portfolio has increased to 2% from 1.7%. This move demonstrates the confidence in FedEx Freight's ability to deliver strong performance in the future. As the company continues to navigate the challenges and opportunities in the LTL market, investors will be closely watching its progress and awaiting the next quarterly earnings report. With the right strategy and execution, FedEx Freight is poised to capitalize on the improving freight cycle and drive growth in the years to come.
Source: CNBC · 2026-08-14