MF: Buy These Now - $UPS $NEE $AY

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By Daniel Foelber, Scott Levine, and Lee Samaha - Apr 19, 2022 at 6:30AM…

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I think you expect UPS and maybe the others to respond to a possible recession. Maybe less than a year away. Not a good time to buy in a taxable account. Better to wait for bottom.

Charts for all:

I don’t pay much attention to buy and hold, Peter, except for holding “zero cost” shares in the Roth IRA which represent gains taken in underlying shares of companies - or sectors & commodities - and which I forget and allow the dividends to reinvest.

For instance, let’s say I play the $UPS setup (but I will not as earnings are next week)and “win” with an options trade. Because I like $UPS, I’d buy zero cost shares with options winnings. Then forget those shares. Until there’s a new options trade down the road - long or short in $UPS again. As long as I win, I buy underlying shares.

BTW, I like $UPS over all other last mile delivery services. And in a Recession, hell, even now, more drivers are gravitating to their unionized health benefits and safety features.

John Oliver just did a bang up piece on what is wrong with trucking (including last mile deliveries by $AMZN and $FDX) and I hope $UPS is like a beacon on a hill hearkening long-haul truckers to get their own unions going in all these predatory trucking companies where turnover is 100% to 300% per annum. Some of these trucking companies charge drivers on their leasing plans a nightly parking fee when their trucks are left in “the yard.” Here’s the catch: if you don’t own the truck outright, but are still leasing weekly, you can’t take the truck home.

Here’s another: charging drivers for use of company toilet paper. I kid you not.

Loads of other abuse I was not aware of in trucking until I saw this:

Peter, I’m adding more to my $UPS theme where its union means better pay, better benefits, and better recruitment (and why I would buy “zero-cost shares” after any successful options trade) which means employees who deliver better service.

Here’s a recent puff piece in Barron’s which advises to buy $FDX. Some of the thinking:

UPS, at $188, fetches 15 times estimated earnings in calendar 2022 and trades at an unusually wide premium to FedEx. The recent weakness in both FedEx and UPS shares reflect concerns about the economy and consumer spending later this year.

“It’s extremely frustrating,” says Joe Fath, a senior portfolio manager at T. Rowe Price, a large shareholder. “It’s crazy how cheaply FedEx trades. It shows how little faith the buy and sell side have in the company.”

Much of the frustration has to do with the weak profit margins at FedEx Ground, which the company has expanded significantly in the past decade to take on UPS in e-commerce.

More note worthy is a comment from a $UPS driver and 2 more comments underneath his. Everything said here clicks with my observations of $UPS vs $AMZN, $FDX and USPS parcel delivery down this dirt road I live on as “last house on the right” with long drive. Not once, never, has an $FDX last mile driver made it down my road to my drive. I have had overnight parcels left on top of USPS mail boxes at the other end of my road, 1/2 mile away, no protective bags around the cardobard boxes or envelopes and no knowledge the damn thing was sitting there under a squall.

p.s. I could have written that second comment. It is the exact “service” I’ve come to abhor from $FDX in last mile delivery:

Dwayne Tindall
·17 April, 2022

As a driver for UPS I work in proximity with other delivery company’s. The basic fundamentals of our industry is to get customers their deliveries. Customers want to receive delivery’s as quickly as possible, undamaged and delivered to the requested address. I know at UPS we are held accountable to making all these things happen. We are not a storage unit. If it comes in that morning 99.9% of the time it goes out for delivery that day. Exceptions for delays could be incorrect addresses, damage in transit and weather delays. I have heard from other delivery company’s that some days they won’t go to certain areas because of lack of delivery volume in those area or not enough drivers. The issue here is customers track deliveries and expect them to be on time. The FedEx ground driver in my area lacks basic customer relation skills. He won’t drive on unpaved roads. He won’t go up stairs. When asked why he replied I have no insurance. He’ll leave packages in the rain, unbagged. He will deliver packages to community locations such as grocery stores and hardware stores and not notify the customer. The customer tracks the packages as delivered but can’t locate them. The FedEx ground drivers are contract employees. The compensation and benefits they have are minimal at best. So in turn they give minimal effort.
It is correct that we at UPS are in a union, the International Brotherhood of Teamsters. It is also correct that we’ve been in business for over 100 years. It’s worked well.(Edited)



Allan Kauders
·16 April, 2022

My personal experience with the company is such that I wouldn’t invest in it. I live in a rural area. Our Fed Ex driver drops packages off at our street’s centralized post boxes instead of at resident’s houses. Packages get stolen frequently. The street’s residents have complained to Fed Ex, and the company has repeatedly promised to take action. Nothing changes. Most of us now cancel online orders if delivery is fulfilled by Fed Ex. Is this experience a good enough reason to avoid investment? Perhaps not. But there are lots of good companies out there. Why invest in one that fails at basic customer service?



Patrick Leonard
·17 April, 2022

I agree, Fed Ex for us has been the worst of the worst. The problem is they subcontract all the final deliveries and have no one to answer to. Just throw it on the side of the road and call it a day.