We're calling up a Bullpen stock, buying small to give us room to build

An important development from the financial markets: We're initiating a position in FedEx , buying 100 shares at roughly $370. Following Monday's trade, Jim Cramer's Charitable Trust will own 100 shares of FDX with a weighting of about 0. We're calling up FedEx from our Bullpen stocks-to-watch list following Jim's visit to the company's World Hub in Memphis, Tennessee, and interview with CEO Raj Subramaniam.

FedEx has undergone a remarkable turnaround under Subramaniam, prioritizing growth in high-margin verticals such as business-to-business (B2B) and specialized business-to-consumer (B2C). In B2B, the company is focused on four key verticals: healthcare, automotive, aerospace — and yes, data centers. Combined, FedEx estimates these verticals represent a $130 billion market opportunity, and they are growing much faster than the broader economy and come with higher margins.

Economic Details

We're not calling FedEx at "data center play," but we also shouldn't ignore the tailwinds the AI buildout has on the business. FedEx plays a crucial role in the supply chain, transporting highly valued semiconductors, servers, and other products. This equipment is precious cargo, requiring specialized knowledge and handling that companies turn to FedEx for.

This is a $7 billion addressable transportation market, according to the company, and should provide a nice revenue stream for many years as data centers pop up all across the globe. In B2C, FedEx has a dominant market share in transporting goods weighing over 50 pounds. Another factor they look at is the value of the goods.

The company earns a better margin on shipments that are highly valued because customers are willing to pay a premium on speed, reliability, tracking, and security. A funny moment happened at the Investor Day in February, when the chief customer officer explained, "If you're shipping T-shirts, FedEx might not be for you. But if you are shipping Oura Rings, FedEx is for you.

Analyst Views

" Taking out costs and improving margins has been another key part of the turnaround. From fiscal year 2023 through fiscal year 2025, the company has removed $4 billion in costs across air, surface, and general & administrative expenses. Another $2 billion in savings is expected to be realized by the end of 2027 through its Network 2.

0 and One FedEx initiatives. Outside the broader economy, a longstanding risk that has impacted the stock at times is concerns that Amazon will disrupt transportation supply chains. Those fears intensified on May 4 after Amazon announced the launch of Amazon Supply Chain Services (ASCS).

The news caused FedEx shares to sell off about 9%, dropping from $393 to $358. When Jim was in Memphis, he asked Subramaniam what impact this news could have on the business. The FedEx CEO also currently sits on the board of Procter & Gamble (another Club stock).

Financial markets are tracking the development closely as investors assess the likely impact.