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Tickers in this Article: UPS, FDX, WMT, M
With the economy in the midst of a recovery, package delivery companies have the potential to do well as consumers and businesses ramp up spending the demand for shipping both domestically and internationally could increase as well. With that in mind, let's discuss UPS (NYSE:UPS) and FedEx (NYSE:FDX) in a little more detail.

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Ship Shape
UPS, the world renowned Georgia-based package delivery company, released its first-quarter earnings earlier this week. The company earned an adjusted 71 cents per diluted share in the period, which was a head-turner as Wall Street had been looking for 58 cents per share. This type of beat is bound to gain attention from retail and institutional shareholders, especially those looking to put new money into play in this hectic market. The results will likely cause the sell-side to raise its full year estimates.

The company also indicated its looking for an adjusted $3.05 to $3.30 per share for the year, up sharply from the $2.70 to $3.05 a share. Again, this is the type of exciting news that investors are looking for in this market and the type of news that can draw attention from the investment community.

The fact that management is willing to set the bar at a higher level is a good sign of confidence. Actually, my sense now is that even management's current outlook may end up being conservative.

For those keeping track, the Wall Street estimate for this year has actually inched up from $2.77 per share 90 days ago to $2.95. Based upon the outlook, the estimate is likely to go even higher. (For more on analyst expectations, be sure to read Analyst Forecasts Spell Disaster For Some Stocks.)

UPS isn't alone in its good fortune; FedEx is also bringing in big dollars these days. The company has exceeded estimates in three of the last four quarters. It is also interesting to note that the estimate for 2010 has moved up from $3.58 per share 90 days ago to $3.74. However, the $3.74 per share estimate is very achievable. At present, the $5.05 a share estimate for next year looks achievable too.

The Bottom Line
While some think that retailers along the lines of Wal-Mart (NYSE:WMT) or Macy's (NYSE:M) may be the best way to play the economic rebound underway, the big name package delivery companies deserve a look. Both UPS and FedEx have been exceeding estimates and both have strong earnings growth potential in the years to come.

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