United Parcel Service (UPS) Stock: Is It Time To Buy?

United Parcel Service, Inc. (NYSE: UPS)

United Parcel Service has had an incredibly hard time in the market throughout the year 2015. However, I believe that the stock is primed for gains. Now may be the time to get in on this one. Today, we’ll talk about why UPS is likely to climb throughout 2016 and beyond.

UPS Has A Solid History Of Producing Strong Earnings

Earnings is one of the first things I look at when attempting to determine if a stock is a good one to buy. In the case of UPS, the company has historically produced solid earnings quarter after quarter. In fact, over the course of the past 4 quarters, the company has beat analyst expectations with regard to earnings 3 times and met earnings expectations 1 time. Not once over the past 4 quarters has UPS missed earnings expectations.

Fundamentally, UPS Is Headed Upward

While solid earnings are a great indication of a strong stock, I’ve seen several cases where, after several quarters of strong earnings, a company produces under expectations. So, it’s important to look at fundamental factors associated with the stock in question. In the case of UPS, there is one fundamental factor that’s likely to send the stock skyrocketing! That is a big change in consumer habits.

As most know, UPS specializes in shipping products. While consumers aren’t shipping letters and paying bills by mail as much today as they used to, these types of shipments have never been the bread and butter for UPS. For UPS, the bread and butter is the shipment of larger things. This leads us to a discussion over a major change in consumer habits!

In the past, when consumers wanted to purchase products, the first thing they thought of was going to the store and getting what they wanted. However, times are changing and so are consumer habits. Today, more and more consumers are grabbing their laptops, tablets, smartphones and more when they decide that it’s time to purchase a product. Online retail is expanding in a big way. Amazon, Ebay, Google and Facebook have all become great ways to find great deals and are growing in big ways because of the ways consumers are shopping today. In fact, IBIS World Research forecasts that online purchases will grow by 8.6% per year over the course of the next 5 years!

When shopping online, one thing is certain, products will need to be shipped. While companies have the ability to ship products using any carrier they would like, there’s no doubt that UPS is likely to take a large portion of those shipments. In fact, according to Statista, UPS takes the largest market share over any other shipping company. Even FedEx doesn’t come close to the market share held by UPS! Therefore, as online retail continues to grow, we can expect to see sustained growth in UPS shipments, revenue and earnings. This will likely lead to bullish activity in the market.

What We Can Expect To See In 2016

When it comes to UPS, I have an overwhelmingly bullish opinion of what we can expect to see from UPS. The reality is that when we talk about UPS, we’re talking about the shipping company that takes the largest market share. With online shopping climbing, it only makes sense that this company’s earnings would climb as well, leading to investor excitement and growth in the stock.

What Do You Think?

Where do you think UPS is headed and why? Let us know your opinion in the comments below!

[Image Courtesy of Wikipedia]

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