United Parcel
Service (UPS ) is the world’s
largest integrated air and ground package delivery service, operating in over
200 countries. The company also offers specialized transportation and logistics
services. UPS had grown its
dividends and profits at a 7-11% pace in the last ten years earning a 20%+
return on equity. UPS should be able to generate above earnings
growth as a result of:
(1) new,
innovative delivery solutions,
(2) price
increases,
(3) its
continued investment in technology and service enhancements,
(4) its effort
to raise its health care distribution business which is expected to grow at a
well above average pace,
(5) an ongoing
share repurchase program.
Negatives:
(1) it is in a
highly competitive industry,
(2)
approximately 60% of its work force in unionized subjecting it to the risks of
work stoppages and slowdowns,
(3) its
international exposure increases the risks of economic difficulty from both the
EU and the more volatile emerging markets,
(4) rising
pension and healthcare costs.
Statistical Summary
Stock
Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2004
Ind Ave 1.2 12 21 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
Ind Ave 53 13 NA 7 NA
*many companies in UPS industry do not pay dividends
Chart
Note:
UPS stock made great progress off its March 2009 low, quickly surpassing the downtrend
off its October 2007 high (straight red line) and the November 2008 trading
high (green line). Long term, it is in
an uptrend (blue lines). Intermediate
term, it is in an uptrend (purple lines).
Short term, it is in an uptrend (brown line). The wiggly red line is the 50 day moving
average. The Dividend Growth Portfolio
owns a 75% position in UPS. The upper boundary
of its Buy Value Range is $71; the lower boundary of its Sell Half Range is
$96.
02/14
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