The Upside On Shipping UPS

By Investopedia Staff | June 26, 2012 AAA

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.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Ship Shape
UPS, even with a market cap of $73 billion, has seen an increase in revenue, gross profit, operating income, and net income each year for the past 3 years. The stock is currently trading with a P/E ratio of about 19.5, and a fowrad P/E of 13.96. The comany's also currently yields a dividend of 3% but, because the stock is trading closer to its 52-week high than to its low, investors may want to wait for a pullback before buying in.

SEE: 9 Ways To Use A Tax Refund

What about UPS' main competitor, FedEx? Unfortunately, The company has missed some earnings estimates in the past, and FedEx doesn't appear to be fairing so well because of it. However, this may be good for investors looking for a bargain. The stock currently trades with a P/E of 13.78, and a forward P/E of 10.38. The company has seen slight income increases in the last two years, while remaining one of the market leaders. Again though, the company is trading closer to its 52-week high than its low and investors may want to keep an eye out for a slight pullback before betting on this one.

SEE: Analyst Forecasts Spell Disaster For Some Stocks

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. However, UPS has been exceeding estimates with strong earnings growth potential, and may be the favourite at this time.

You May Also Like

Related Analysis
  1. Stock Analysis

    Wal-Mart to Heighten Poultry Safety Measures to Curb Risks - Analyst Blog

  2. Chart Advisor

    Profit From Holiday Spending With This ETF

  3. Stock Analysis

    Stock Market News for December 18, 2014 - Market News

  4. Stock Analysis

    Amazon Break-Up Hype Continues, But Analysts Don't Buy It

  5. Stock Analysis

    Wal-Mart Stores (WMT): New Analyst Report from Zacks Equity Research - Zacks Equity ...

Trading Center