5. United Parcel Service, Inc. (NYSE:UPS)
52 Week Range: $123.12 – $172.75
Current Share Price: $128.55
Number of Hedge Fund Holders: 44
Market Capitalization as of September 3: $110.11 Billion
United Parcel Service, Inc. (NYSE:UPS) is a freight and logistics company that provides shipping services in the U.S. and across the globe. It offers international air and ocean freight forwarding, post-sales, and mail and consulting services.
It is one of the best beaten-down stocks to invest in as it is well-positioned to benefit from an improved macroeconomic environment on the U.S. central bank cutting interest rates. While its underperformance has everything to do with fluctuations in shipping demand and pricing, things are improving amid shipping volume growth in the U.S.
Domestic shipping volume increased by 1% in Q2 compared to the previous year, marking the first positive outcome in nine quarters. There was also a rise in demand across sectors such as air cargo and global export markets, which is seen as a positive sign. The business anticipates a wider recovery in the latter part of the year, accompanied by an improvement in the operating profit margin.
While United Parcel Service, Inc. (NYSE:UPS)’s second-quarter earnings totaled $1.79, missing estimates of $1.98 a share, they are poised to receive a boost heading into year-end. Revenues totaled $21.8 billion, missing estimates of $22.2 billion.
The logistics company raising its full-year revenue forecast to $93 billion from the previous forecast of between $92 billion and $94.5 billion affirms improving business conditions. United Parcel Service, Inc. (NYSE: U.P.S.) plans to accelerate growth by expanding its footprint in Mexico with plans to acquire small package provider Estafeta. It also plans to enhance its logistics services for the healthcare sector and small and medium-sized businesses.
The deep pullback close to 52-week lows has left United Parcel Service, Inc. (NYSE:UPS) trading at a price-to-earnings multiple of 17, much lower than the average P/E of 26 for the industrials. This means that the stock is trading at a discount with solid revenue growth prospects on robust underlying fundamentals.
According to Insider Monkey’s database, the number of hedge funds with stakes in United Parcel Service, Inc. (NYSE:UPS) increased from 43 to 44 by the end of June.
ClearBridge Investments, an investment management company, released its second quarter 2024 investor letter. Here is what the fund said:
“Our industrial holdings weighed on relative performance as we are more exposed to transports such as “less than truckload” provider X.P.O. 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 X.P.O. 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 A.I. data centers.”
