It's amazing how quickly the mood can shift on Wall Street. At the end of 2018, it was all doom and gloom as stock prices fell hard over fears about the economy. But fast-forward seven months, and the S&P 500 index is up 16.7% year to date.

Not all stocks are up for the year. The share prices of shipping giant FedEx (FDX -0.87%) and leading apparel brand Levi Strauss (LEVI -2.27%) are both down double-digits for the year, but both companies are still growing, which could make these stocks compelling values at today's prices.

A bonsai tree in the shape of an upward-pointing arrow growing out of a white pot.


FedEx isn't afraid of competition

Shares of FedEx have fallen by 34% over the last year over fears of a global slowdown in the economy and the threat of potential competition with -- of which the latter seems to be the biggest concern for investors right now. Amazon has been building a shipping service to better control the delivery process for its customers, which is why FedEx decided to cut Amazon loose recently. Investors are concerned not only about the loss of that business but also about the potential for the online retail titan to compete head-to-head with shipping leaders UPS and FedEx.

I believe these concerns are overblown for a few reasons. First, Amazon made up only 1.3% of FedEx's revenue last year. Amazon is a fast-growing retail giant, but the world is a lot bigger. The global retail industry is estimated at $25 trillion in total sales, which makes Amazon's few hundred billion dollars of annual revenue seem like a pittance.

Beyond that, FedEx doesn't think it needs Amazon. FedEx sees a big opportunity to serve the booming e-commerce market over the next decade, where the number of packages per day is expected to double to 100 million by 2026.

Metric 2019 2018 2017 2016
Revenue $69.7 billion $65.45 billion $60.32 billion $50.37 billion
Non-GAAP earnings per share $15.52 $15.31 $12.09 $10.80
Dividend per share $2.60 $2.00 $1.60 $1.00

Data source: The company. Years are fiscal years ending in May.

Also, facing off with FedEx in the global shipping industry would not be a cakewalk for Amazon. FedEx is very efficient at what it does. The company claims to link more than 99% of the world's GDP with its global network, and it is constantly investing to get more efficient. FedEx has long dominated the air, but it has been steadily gaining on rival UPS in ground shipping speed. FedEx's ground market share has steadily climbed over the last few decades from less than 20% to more than 30%.

Right now, the company is focused on getting more efficient at handling residential e-commerce deliveries, particularly in rural areas. It just announced a deal to handle shipments for more than 8,000 pickup and delivery locations for Dollar General stores in low-population rural areas. FedEx also has expanding agreements with other major retailers like Walgreens Boots Alliance and Walmart (which also has its own shipping fleet).

Management is cautious about business activity in the short term, but there's plenty of opportunity to grow in the long term. FedEx will start delivering seven days a week in 2020. Plus, the company is testing the use of robots for last-mile deliveries, which shows how it is thinking forward about how to ship faster, save money, and deliver earnings growth for investors.

FedEx is currently targeting earnings growth of 10% to 15% annually, and the stock is cheap, trading at a forward P/E ratio of just 9.7 times next year's earnings estimate.

There's growth in jeans

Levi Strauss was founded in 1853 and is one of the most recognized apparel brands in the world. Denim is one fashion trend investors can count on. Jeans were designed originally for gold miners in the 1870s and are now considered the unofficial uniform of the Coachella music festival in Southern California.

But since Levi's IPO in March, the stock has fallen 23%. Sales are growing, but investors have been concerned about China tariffs coupled with the stock's high valuation when it started trading as a public company. With the stock down and the valuation at a more appetizing level, this could be a good time to consider buying one of the top denim brands.

Denim is as popular as ever, and that means there are countless brands to choose from. But even with so much competition, Levi saw sales increase by 10% year-to-date compared to the same period in 2018.

The women's business has been particularly strong over the last few years. Women's sales were up 16% last quarter. Management believes there is a significant opportunity to grow the women's category, which is currently being fueled by the growing popularity of cutoff shorts and high-rise fits.

Metric TTM Through Q2 2019 2018 2017 2016
Revenue $5.733 billion $5.575 billion $4.904 billion $4.553 billion
Net income $402 million $283 million $281 million $291 million

Data source: YCharts and the company. TTM = trailing 12 months. Years are fiscal years ending in November.

Levi is also investing in new technologies to improve efficiency and margins. The company is making big strides in e-commerce, with digital sales up 25% in the second quarter. Levi is offering a new way to order online with its F.L.X. technology, which allows customers to design their own jeans. This technology will allow Levi to produce merchandise faster and reduce the number of chemicals used in making jeans. The goal is to reduce inventory and increase margins.

There could be further volatility with the stock in the short term, especially with uncertainty around the trade war. Plus, there was reported weakness in the wholesale channel during the last quarter, stemming partly from retail store closings and poor sales at department stores. But Levi's robust growth in e-commerce can mitigate that reliance over time.

Management is calling for sales growth in the mid-single-digit range this year, with adjusted operating margin expected to be slightly up. The company's focus on initiatives to improve margins should allow earnings to grow faster than the top line over time. That's why at a forward P/E multiple of 14.7 times next year's earnings estimate, and with a dividend yield of 1.65%, this might be a good time to consider buying shares of one of the top apparel brands in the world.