United Parcel Services (UPS)

Would sell UPS and buy Fedex. Fedex is better managing headwinds from Amazon. They also have more areas that Amazon won' tackle. Wouldn't invest in either due to high cost in order to compete. Their current infrastructure is not ready to compete in the e-commerce world, and will eat up their free cashflow.

Longer term, it is a solid company and e-commerce will work well for them. They have to build out their business to allow direct delivery to consumers. This will eliminate their free cash flow for the next several years. Amazon is increasing competition and adding further headwinds.

It is a play on the US economy. The US economy is doing quite well. This is their busy time. You are trying to get in before all the other investors. Get out about December 8^th.

The world leader in deliveries. they will continue to grow and will transition from brick and mortar to online. Trades at only 15x forward earnings and 4% free cash flow yield. A cheap stock. A strong buy. (2.9% dividend, Analysts' price target: $128.05)

(A Top Pick Sept 27/17, up 1%). The largest small parcel company in the world. Amazon will not crush them. They have large economies of scale. Amazon needs UPS and FedEx. Is cheap at 14X next year’s earnings and thinks it is going higher.

He believes the entry of Amazon into this space is creating concern. He would be a buyer here or on further weakness after the current fears subside.

He has viewed this a good indicator of the economy – especially consumer goods. Amazon has decided UPS could not meet peak delivery demand and has decided to invest in their own distribution network. They will still survive.

Involved with the disruption of buying at home rather than in the store. He prefers FedEx, likes its exposure to Europe. UPS exposure to Europe is about 16% whereas FedEx was around 5% before acquiring TNT, increasing exposure by about 12%, putting them neck and neck with UPS. Fedex and UPS have both had a big runup in prices. He likes the FedEx balance sheet better. Neither company pays much of a dividend. Analysts consensus for the UPS stock is around $113. (Analysts' price target $129).

The world's largest package document/delivery company. A clear beneficiary of what is happening with everybody's purchasing behaviour. Produces a lot of free cash flow. Dividend yield 2.5%. (Analysts' price target is $130.)

Very attractive. It is riding the trend of e-commerce. Not just a courier company, they are a "next day" logistics company. He would have no trouble owning this for the long-term.

Has avoided this, but can see why people are interested. There is the view that the post office is going to have to raise package delivery prices. However, the discussion that is important is the complete change in logistics Amazon has created. Feels this and Federal Express are organized around the idea of hubs and moving distribution through central hubs. Amazon is arranged completely differently, building warehouses in large cities. He sees incentives for retailers going directly to consumers to try to take the line away from companies, and try to turn it into a local P&D business.