FedEx top industrial gainer, while Herc picks #1 loser tag amid rising rates, recession fear

FedEx Ground truck driving on the interstate

Sundry Photography/iStock Editorial via Getty Images

Amid looming fears of a recession and interest rate hikes by by certain central banks globally, FedEx led the gainers, while Herc bore the brunt among industrial stocks.

For the week ending June 17, the SPDR S&P 500 Trust ETF (SPY) was in the red (-6.14%) for the second week straight, prior to which it had seen two rare weeks of gains which had broken a 7-week losing streak. YTD, the ETF is -22.97%. The Industrial Select Sector SPDR (XLI) has also been in the red now for two weeks in a row (-5.81%), prior to which it was in the green for two weeks. YTD, XLI is -19.14%.

The top five gainers in the industrial sector (stocks with a market cap of over $2B) did not see any extravagant gains and only one touched double digit percentage change this week. Moreover, YTD, all the five stocks are in the red.

FedEx (NYSE:FDX) +11.19%. The Memphis, Tenn.-based logistics provider’s stock saw its biggest rally in 29 years at the start of the week after it raised its quarterly dividend by more than 50% and added two directors to its board as part of an agreement with activist investor D.E. Shaw. The moves were welcomed by several analysts, including Citi’s Christian Wetherbee who sees a potential upside to the stock “toward $400-$450/share over time.” The average Wall Street Analysts’ Rating is Buy, which is in contrast to the SA Quant Rating of Hold, which which takes into account factors such as growth and profitability, among others. YTD, FDX has declined -11.11%.

Boeing (BA) +7.72%, plunged at the start of the week along with the Dow Jones index, but the airline maker recovered in the week on reports that the company was ready to restart deliveries of 787s in the coming weeks and after China Southern Airlines concluded a test flight of 737 MAX. The company, however, is unsure of a clear timeline for approval of its 737 MAX 10. But Boeing is nearing a restart of delivery of its 787 Dreamliner. The stock was also upgraded to high-risk Buy at Citi with a potential for 70%. The SA Quant Rating on the stock is Hold, wherein the company’s Valuation has a factor grade of D, while Growth carries a C grade. YTD, BA has fallen -32.05%.

The chart below shows 6-month price-return performance of the top five gainers and SP500TR:

Upwork (UPWK) +4.66% was among the stocks Bank of America said should benefit from a transforming world. Bofa expects “the gig economy to continue to grow in the 10-20 years when Gen C enters the workforce.” The Wall Street Analysts’ Rating is Buy, with an Average Price Target of $32.18, which is in contrast to the SA Quant Rating of Hold. YTD, Upwork has slumped -44.79%, the most among this week’s top five.

Hertz Global (HTZ) +2.81%. The Estero, Fla.-based car rental company saw its stock rise after it approved new $2B share buyback program. The Wall Street Analysts’ Rating is Buy with an Average Price Target of $28.71. YTD, Hertz is down -28.21%.

SPX (SPXC) +1.13%, Charlotte, N.C.-based company, which makes temperature control products, has seen its stock tumble -13.10% YTD. The SA Quant Rating on the stock is Buy, while the Wall Street Analysts’ Rating is Strong Buy with an Average Price Target of $71.25.

This week’s top five decliners among industrial stocks (market cap of over $2B) all lost more than -16% each. YTD, all these five stocks are in the red.

Herc (NYSE:HRI) -20.32%. The Bonita Springs, Fla.-based company, which rents earthmoving and other material handling equipment, saw its stock decline throughout the week with the most on June 16 (-11.34%) as U.S. stock market fell on fears of recession after Federal Reserve’s rake hike a day ago to bring down inflation. YTD, the stock has slumped -43.25%. The SA Quant Rating on the stock is Hold, wherein the company’s Profitability has a factor grade of C+, while Valuation carries a B grade. The rating is in contrast to the average Wall Street Analysts’ Rating of Buy, with 6 out of 10 calling it a Strong Buy.

Beacon Roofing Supply (BECN) -18.66%. At the start of the week, the Herndon, Va.-based company announced a $250M stock buyback program. BECN stock met a similar fate to HRI, declining throughout the week, the most on June 16 (-10.62%). YTD, the stock has lost -12.41% but the SA Quant Rating on the stock is Strong Buy, while the average Wall Street Analysts’ Rating is Buy with an Average Price Target of $71.29.

The chart below shows 6-month price-return performance of the worst five decliners and XLI:

Encore Wire (WIRE) -17.49%. The Texas-based wire and cable maker’s stock made to the decliners’ list this time after being among the gainers over a month ago. YTD, the stock has lost -23.70% but the SA Quant Rating and the average Wall Street Analysts’ Rating, both give it a Strong Buy rating.

AZEK (AZEK) -16.73%. The Chicago-based building products maker’s stock declined majorly on June 13 (-7.60%) and June 16 (-13.90%). The stock tried to pare off some losses the following day (June 17 +6.21%) after Bank of America upgraded Azek to Buy from Neutral noting that the stock’s valuation “has de-rated vs. building products group and growth potential is compelling.” YTD, AZEK has crashed -63.73%, the most among this week’s decliners, and has SA Quant Rating of Sell. The Wall Street Analysts have a different view and have given the stock a Strong Buy Rating, with 12 out of 19 analysts calling it a Strong Buy.

Terex (TEX) -16.54%. The Norwalk, Conn.-based company, which sells cranes and other materials processing machinery, saw similar a decline in its shares, June 13 (-7.65%) and June 16 (-8.94%), as AZEK. YTD, the stock has tumbled -35.47%. The SA Quant Rating on the stock is Hold, while the Wall Street Analysts’ Rating is Buy. SA contributor Leo Nelissen wrote in April: Terex Is Cyclical, And That’s Great. Nelissen had said to put the stock on your watchlist as further stock price weakness was likely, but Buy when economic growth rebounds.

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