United Parcel Services (UPS)

(A Top Pick Oct 27/16. Up 11.94%.) This has an extremely strong seasonal trend coming into the holiday season. It has outperformed the S&P 500 80% of the time. October 10 is the time to get in, and December 8 is the time to get out.

From early in the year he has been talking about it. They do well from Oct. to Dec. each year.

Normally when a stock goes down 10%, he ditches it, and probably before it gets there. Doesn’t like this stock. All the fundamentals are quite weak. FedEx (FDX-N) is the preferable route to go if you want to be in shipping, but with weaker overall growth in Europe and the US, and with market expectations coming down, you should just Sell on any up day.

This has been underperforming FedEx (FDX-N) for some time. What is worrying the street and the market generally is growth. It is really hard to see how the stock is going to perform and if you own, you should lighten up. You could consider 3M (MMM-N) instead.

We are in a period of seasonal strength for industrial companies in general, but everything seems to be rolling over. Chart shows it is coming back down to support at $94, but that was broken today. January until May is the next run up seasonally.

FedEx (FDX-N) or UPS (UPS-N)? Both very good companies. Everybody is now buying online, and both companies are bulking up for the peak season. They have both equally increased prices. As an income investor he has always preferred this one. Feels it is a better run business with higher margins. Gives a higher return on capital with a much more aggressive return of capital back to shareholders with a large dividend and a significant share buyback. Dividend yield of about 3%.

FedEx (FDX-N) or UPS (UPS-N)? Model price of $55.90 versus $102.45. This company blew out its balance sheet. Of the 2, he would look at FedEx before he would look at this one.

UPS (UPS-N) versus FedEx (FDX-N)? Of the 2, he would buy FedEx. This one has had some operational stumbles. In the last 2 holiday seasons, it has not executed the way FedEx has, and it has come home to roost.

It is a bellwether. It is US economy sensitive. It broke out in 2013 and is now trying to break its trend line to the downside. It is below the 200 day and below the 50 day and the 50 is below the 200. It is very worrisome.

The future in retailing in a large part is online, and those goods have to get to you somehow. This company has certainly committed to rewarding shareholders. They have a good solid dividend and have committed to repurchasing shares. A good, long term hold.

Had a real misstep in their 4^th quarter, but it all came back to their execution over the holiday season. This is 2 years in a row. Did some serious cost cutting which the street liked, but some times you can cut to the bone. He thinks this is what happened here. They are not executing well.

Stumbled in the 4^th quarter on the cost side. Had a lot of trouble, which seemed to be company specific. Because of that, he would favour FedEx (FDX-N) over this. Also, this is a little more expensive on a valuation basis.

FedEx (FDX-N) or UPS (UPS-N)? Both are decent early cycle industrial stocks. If the global economy suddenly improved, both should do quite well and quite quickly. They are huge beneficiaries of lower oil prices. Historically FedEx has been thought of as the better operator, better return figures and better margin figures. There is a huge sweet spot in transportation in North America, and that is the rails.

(A Top Pick Oct 28/14. Up 9.92%.) October to now is a very strong seasonal trend for stocks. From 2000, when this company initially went public, it has produced an average rate of return of 8.5%. This year it was over 14%.

There are differences between this and FedEx (FDX-N). This company is more of a ground/domestic provider. FedEx is very much skewed to air freight. They said this morning that earnings were “bad”, but thinks that what really happens in a situation like this is that expectations are built in to a level, and if they fail to hit those expectations, they are characterized as “bad”. They had good growth and this is a good company. He tends not to buy these types of companies as they move into their sweet spot of the seasonal delivery time, because that is when they get the most attention and the premium build. He would tend to stay away from companies like this at this time. FedEx is probably the company he would go to, but not at this time.