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United Parcel Service, Inc. (NYSE: UPS) is the world's largest package-delivery company, transporting more than 15.6 million packages and business documents per business day.
Analysts really like UPS' solid U.S. market share, increasing international business, and large 101,000-vehicle delivery fleet. UPS also owns 600 planes.
Analysts also are impressed by UPS' China export activity, part of an international business that should generate a 10-13% revenue gain in 2008. In addition, the company's supply chain/freight business continues to show promise, with a 5-8% revenue gain expected in 2008.
Meanwhile, pricing power remains adequate, and the company's balance sheet is strong. The Reuters FY 2007/FY 2008 EPS consensus estimates for UPS are $4.16 to $4.46.
The risks? Like most transportation-based business models, UPS remains vulnerable to an increase in fuel costs. Analysts are also watching UPS' package deliveries by U.S. region, for signs of a pronounced slowdown.
The First Call mean rating for UPS is: Buy [18 firms]. Mean 2008 target: $84.00 [high: $93, low: $70].
Stock Analysis: United Parcel Service is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from UPS' shares. Sell/Stop Loss if you were to purchase shares in this company: $47.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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