This Delivery Giant Still Looks Cheap: FedEx Corporation (FDX), United Parcel Service, Inc. (UPS)

Page 1 of 2

FedEx Corporation (NYSE:FDX) is a leader in guaranteed time delivery for both domestic and international package delivery, the demand for which has skyrocketed lately.  With the growing number of consumers doing their shopping online, FedEx’s revenue has nearly doubled over the past decade.  Although their stock is currently trading towards the high-end of its historic valuation at 17 times earnings, I think this is still a bargain, due to both the strong earnings growth projected, as well as the strength of the company itself.

FedEx provides time-definite delivery services in more than 220 countries, as well as freight transportation and customized logistics for their customers.  FedEx Corporation (NYSE:FDX) bought Kinko’s for $2.4 billion in 2004, which allowed the company to provide business services at over 1,200 locations that were subsequently renamed FedEx Office.

The company has a network of 52,400 ground vehicles, 660 airplanes, and 58,400 drop-off boxes, which makes it the world’s largest provider of guaranteed express delivery services.  Their general strategy is to ensure that their business is running as efficiently as possible, while at the same time expanding their global reach.  For example, FedEx Corporation (NYSE:FDX) has the authority to operate 30 weekly flights into China, the most of any U.S.-based carrier.  To further highlight the company’s potential for overseas growth, consider that less than half (48%) of their revenue currently come from international operations.

As far as delivery services go, FedEx’s main competitors are United Parcel Service, Inc. (NYSE:UPS) and the United States Postal Service, as well as other government and independent delivery services around the world. United Parcel Service, Inc. (NYSE:UPS) is the world’s largest express and package delivery company, and is much more of a domestic company, with only 22% of revenue coming from international package deliveries.  United Parcel Service, Inc.(NYSE:UPS) delivers 15.8 million packages per day, or just over 4 billion per year.

One of my favorite aspects of UPS as an investment is its track record of increasing its dividend (currently at 3%, much more than the 0.5% yield of FedEx).  United Parcel Service, Inc. (NYSE:UPS) also has a very nice buyback program, and since 2009 has reduced the number of outstanding shares by 6.7%.

There are also a number of ETF’s that allow investors to get exposure to the entire transportation index, with my favorite being the iShares Dow Jones Transportation Average Index Fund.  This is actually my favorite way to play the sector as a stable long-term investment, and also get some income with a dividend yield of about 1%.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!