Editor’s Note: While Sam Collins is on vacation, we’ve asked Nick Atkeson and Andrew Houghton, editors of Big Money Options, to provide you with a trade of interest until Sam returns June 1.
United Parcel Service Inc. (UPS) — May consumer confidence number was reported Tuesday at 54.9, up from 40.8 in April. If consumers start to buying again, much of it will be online given price, selection and time advantages offered by the Internet.
Items consumed online are shipped to the consumer. The U.S. Postal Service, FedEx and UPS are the three remaining retail shipping companies in the United States. DHL and Emery are no longer competitors.
UPS went public in November 1999 for an IPO price of $50 per share. In 1998, the year before the company went public, UPS reported sales of $24.8 billion and net income of $1.7 billion. Ten years later, these numbers essentially doubled to $51.5 billion and $3 billion respectively in 2008.
The stock is still at about $50 on its most recent pull-back. If you were to buy UPS now, you would be paying, in valuation terms, half of the IPO price with a much improved competitive landscape. Additionally, UPS has a dividend yield of more than 3.5%.
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