United Parcel Service, Inc. (UPS), FedEx Corporation (FDX): Why This Small Shipping Company Is Worth Considering

FedEx Corporation (NYSE:FDX), on the other hand, focuses more on air express services and actually provides air transport of Priority, Express, and First Class mail for the U.S. Postal Service. While FedEx earns most of its money from air transportation, it does operate the second-largest ground package delivery company in the country, FedEx Ground, which accounts for 24% of the company’s revenue.

FedEx Corporation (NYSE:FDX) is expected to grow its earnings the fastest out of the three at around 16% per year for the next few years, mainly due to the company’s cost-saving programs and anticipated increased domestic and ground volume resulting from the improving U.S. economy. FedEx looks very cheap at just 14 times 2013’s earnings, but the company pays the lowest dividend yield (0.60%) and its high reliance on international economies creates an added risk.

Conclusion

All three companies mentioned here are attractively valued and should produce very nice gains over the next several years as the U.S. economy improves. Forward Air Corporation (NASDAQ:FWRD) is worthy of consideration due to its excellent financial condition and great record of revenue growth. It is also a good pick if you believe (as I do) that the U.S. economy will continue to improve, and want as little exposure to shipping demand in shakier foreign economies as possible.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends FedEx and United Parcel Service.

The article Why This Small Shipping Company Is Worth Considering originally appeared on Fool.com.

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