United Parcel Services (UPS)

Involved with the disruption of buying at home rather than in the store. He prefers FedEx, likes its exposure to Europe. UPS exposure to Europe is about 16% whereas FedEx was around 5% before acquiring TNT, increasing exposure by about 12%, putting them neck and neck with UPS. Fedex and UPS have both had a big runup in prices. He likes the FedEx balance sheet better. Neither company pays much of a dividend. Analysts consensus for the UPS stock is around $113. (Analysts' price target $129).

The world's largest package document/delivery company. A clear beneficiary of what is happening with everybody's purchasing behaviour. Produces a lot of free cash flow. Dividend yield 2.5%. (Analysts' price target is $130.)

Very attractive. It is riding the trend of e-commerce. Not just a courier company, they are a "next day" logistics company. He would have no trouble owning this for the long-term.

Has avoided this, but can see why people are interested. There is the view that the post office is going to have to raise package delivery prices. However, the discussion that is important is the complete change in logistics Amazon has created. Feels this and Federal Express are organized around the idea of hubs and moving distribution through central hubs. Amazon is arranged completely differently, building warehouses in large cities. He sees incentives for retailers going directly to consumers to try to take the line away from companies, and try to turn it into a local P&D business.

(A Top Pick Oct 27/17 Down 1%.) There is a big question mark around the future of delivery. Everybody is scared of Amazon. From a seasonal perspective, UPS doesn’t do well at this time. The seasonal trade finished on December 10th and since has pull back a little bit. From now until March it tends to be a poor performer. It’s better in fall time. This is not the time to be in UPS.

This is their busy time. It is not as compelling now. Their peak date is in a few days. Their seasonal hiring may be a little bit less this year. They get surges and try to deal with it by charging higher rates. It could lead to higher costs also. Between now and Christmas if there is no bad weather the company could do well. It all has to do with how they deal with the surge in business. At some point Ecommerce growth will slow. At the current valuation it is not as compelling as at lower levels.

The balance sheet is taking a sort of a series of steps downwards. That is probably due to the idiots (company?) buying back their own stocks. Looking at the earnings forecasts and FMV, it has been flat lining since they began buying back stock. Because of this, the stock has actually created extra value. It is very expensive, trading at 30X its BV. The FMV is $82 which gives you a 33% downside risk from here. He would be very cautious about this company.

(A Top Pick Feb 21/17. Up 8%.) Given the advent of e-retailing there are more package deliveries going on. Amazon has been the high profile player in e-commerce, but he would argue that the safer players would be companies like this and FedEx. Trading at 16X 2018 earnings with a 3% dividend yield that gets increased every year.

There is a really strong seasonal period for this company. Since 2000 to 2016 on average, it has underperformed the S&P 500 annually. However, in the small window from Oct 10 to Dec 8, it has averaged 8% and outperformed the S&P 500 88% of the time. You want to be in it before everybody else gets in, so you get in early. If you are into Short Selling, then you want to Short this from Dec 9 to March 1. Dividend yield of 2.8%. (Analysts’ price target is $125.)

This hits all the boxes. It is expensive. Closed at $118.34, and his model price is $57.25, 51% higher than its model price. He would be a buyer on any pullback.

World’s largest package delivery company. Trading at about 9X-10X EV to EBITDA. Trading at 17-18 times earnings for a dominant position, and it is going higher. Dividend yield of 2.8%. (Analysts’ price target is $117.)

This is in the industrial space, and with the economy moving along and getting stronger, it will be a name that will probably do well going forward. Trading at around 18X earnings with about a 9% growth rate, so it is not too cheap at this point. It has dropped below its 200-day moving average, which concerns him a little.

Has a huge position in FedEx (FDX-N) which is where he sticks his claim on the whole delivery space. However, this would certainly be something he would be happy to own. Doesn’t know why it has dropped, but would take advantage of it.

The world’s largest, global logistic company. The largest provider of small package and document delivery in the world. There was a little disappointment with their earnings last quarter and the stock pulled off, making it a great buying opportunity. Trading at 16X next year’s earnings and a 5% free cash flow yield. Dividend yield of 3.08%. (Analysts’ price target is $115.)

He likes the carrier space and has done quite well on them. This one is acting well and has not been part of this whole run up. It is drifting higher on half decent volume. He thinks this is going to go higher.