16 Most Undervalued Stocks to Buy Now

12) United Parcel Service, Inc. (NYSE:UPS)

Forward P/E as of August 22: 16.86x

Number of Hedge Fund Holders: 44

Expected EPS Growth this Year: 14.8%

United Parcel Service, Inc. (NYSE:UPS) provides logistics services. It offers shipping, tracking, brokerage, freight forwarding, billing, and goods transportation services.

Wall Street analysts opine that the company is at an inflection point. Its US volume increased in 2Q 2024 for the first time across nine quarters. With this, average daily volume went up YoY in 11 of its top 20 export countries. The company should see solid earnings growth in 2H 2024. The company returned to volume growth in the US for the first time in 9 quarters.

United Parcel Service, Inc. (NYSE:UPS)’s business is expected to benefit from the high barriers to entry in the courier industry. Such barriers include the need for extensive transportation infrastructure together with established customer relationships. Not all companies can afford to invest millions and billions in scaling up the shipping network. The company plans to acquire Estafeta and this should help it expand its footprint in Mexico and enhance logistics orchestration. Also, it expects to save from the sale of Coyote and reduce spending. This should help free up cash for repurchases.

For 2024, United Parcel Service, Inc. (NYSE:UPS) expects consolidated revenue of ~$93.0 billion and consolidated adjusted operating margin of ~9.4%. HSBC upped the price target for the company’s shares from $150.00 to $170.00 on 25^th April. They raised their rating from a “Hold” to a “Buy.”

ClearBridge Investments, an investment management company, released its second quarter 2024 investor letter. Here is what the fund said:

“Our industrials holdings weighed on relative performance as we are more exposed to transports such as “less than truckload” provider XPO and parcel delivery company United Parcel Service, Inc. (NYSE:UPS), which are struggling with weak volumes during the post-COVID freight recession. With industry volumes down to pre-COVID levels and strong pricing power in the LTL space in particular, we believe that the next upcycle will prove to be very strong for earnings. As a result, we added to XPO in the quarter while reducing our position in UPS on concerns that industry capacity remains excessive. Meanwhile, we have less exposure to electrical equipment stocks, which have been rewarded by views that they will benefit from the buildout of AI data centers.”