Brown delivers. UPS is a BUY.

My investment club in Mustang, Oklahoma bought shares of this company last night. It had a couple concerns in our checklist but I don't think those are insurmountable in light of current growth and anticipated growth. It pays too much of a dividend for out blood as we seek growth not income and the sales are low for a massive company like UPS. However the earnings per share are out the top and climate in shipping is going to lean toward companies like UPS. 

See What They Say About The Company

United Parcel Service, Inc. (“UPS”) was founded in 1907 as a private messenger and delivery service in Seattle, Washington. Today, UPS is the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry and the premier provider of global supply chain management solutions. We deliver packages each business day for 1.5 million shipping customers to 7.9 million receivers ("consignees") in over 220 countries and territories. In 2013, we delivered an average of 16.9 million pieces per day worldwide, or a total of 4.3 billion packages. 

We are a global leader in logistics, and we create value for our customers through solutions that lower costs, improve service and provide highly customizable supply chain control and visibility. Customers are attracted to our broad set of services that are delivered as promised through our integrated ground, air and ocean global network.

Here are the stats on this massive company. Sales growth is 3.3%. Earnings per share is at 8.4%. We estimated future sales at 4% and earnings at 8% just to be very conservative. It is barely in the buy zone which is $69 - $107. Todays price is $106.31. The market correction has given us a good entry point on this company. We will see. The dividend is impressive and I disagree with a strict rule our investment club usually holds on this issue. The dividend  has gone up the last five years and is now at $3.64 per share much higher than the 50% of the earnings per share target we use. The earnings per share is $5.62. So we would look for a dividend under $3 as more healthy. But nice when markets are volatile like now. 

They have always had lots of debt. Lots of vehicles. The debt has been excessive the last two years making the debt to capital ratio at a whopping 85%. That is huge. We think they should pay less dividends and lessen their debt. However, they are gearing up for what they perceive to be a major rush.  USPS is doing well but with Trump's lean and mean philosophy they will be forced to raise prices on parcels to match the current carriers and the tax subsidized lower shipping charges will equalize competition. My take. 

So we hopefully buy low today.

PORTFOLIO TO DATE

100  DORMAN INCORPORATED COST $6,114 CURRENT VALUE $7,136

100  CORNING INCORPORATED COST $3,366 CURRENT VALUE $2,945
100  SOUTHWEST AIRLINES COST $5,699 CURRENT VALUE $5,681
100  UNITED PARCEL SERVICES $10,600 CURRENT VALUE $10,600