- UPS and Fedex are a duopoly. The barriers to entry are enormous and its almost inconceivable that a third shipper would ever be able to challenge them.
- UPS has the secular tailwind of e-commerce that should benefit them for years to come.
- UPS trades at 12.5 times 2012 earnings estimates.
- The drop in oil prices might help UPS exceed estimates
- UPS has a solid history of returning cash to shareholders via dividends and share repurchases. The shares have a dividend yield of 3.2%
Many might be wondering why I did not purchase Fedex. Historically UPS has had better free cash flow and returns more cash to shareholders.