UPS and FedEx Transportation Stocks for the Final Quarter

October 12, 2020
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The final quarter is here and it’s time to consider some high potential growth picks. The transportation industry has been hit hard by the Coronavirus Pandemic, but some areas are actually seeing increased volume in delivery orders. Parcel delivery services have seen a significant boost, thanks to the demand for eCommerce in an era of lockdown orders and social distancing.

The following are two transportation stocks that could see an upside before the end of the year.

FedEx Corp. (NYSE: FDX)

FedEx Corp. is a major partner of eCommerce retailers, and package volume has been high in recent months. In the company’s previous quarterly report, it announced $19 billion in sales, with earnings of $4.87 per share. Analysts had predicted just $17.5 billion in sales with earnings of $2.70 per share.

The company expects to see continued high demand for its package delivery services. The stock comes with a dividend yield of 0.96% and a likely upside with an average target price of $294.18.

United Parcel Service Inc. (NYSE: UPS)

Like FedEx, United Parcel Service has seen increased demand for its package delivery services in recent months. The stock has rallied in the market this year and there is likely more to come for investors who buy today.

This stock comes with a better dividend. The yield today is 2.31%. In the company’s previous quarter, it reported sales of $13.07 billion, compared to $11.15 billion a year before. Earnings increased to $2.03 per share, a gain of 4.6% compared to the same quarter a year ago.

The company’s average consolidated shipping volume increased by 20.9% in the second quarter, reflecting the changing conditions in eCommerce and the wider retail industry.

Both Stocks are Strong Bets for Q4

eCommerce sales volumes are likely to increase in the final quarter. Amazon will host its Prime Day sales event later this month, which traditionally drives demand for parcel delivery services. The holiday shopping season is likely to be focused on eCommerce this quarter, with consumers less willing to travel or visit busy stores while the Coronavirus Pandemic is ongoing.

Both UPS and FedEx offer relatively affordable stocks that are ready for growth. With both stocks offering dividends, there’s also the opportunity to generate reliable income when investing in these picks.

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