The delivery showdown has began.
FedEx shares seem to have the higher hand, up nearly 28% in the final three months with 71% of analysts score the inventory a purchase, in accordance with FactSet. Barclays on Tuesday upgraded the inventory to obese from equal weight, citing “an abundance of growth opportunities” tied to the e-commerce growth.
UPS is up 3.5% over the identical timeframe and has Wall Street extra divided: 54% of analysts charge that inventory a purchase, with 27% remaining impartial and 19% in the promote camp. Also, Morgan Stanley warned on Tuesday of “competitive secular threats” dealing with UPS that might erode its consumer-facing enterprise.
As of Tuesday, two traders had been siding with the underdog.
“I prefer UPS over FedEx here,” Mark Tepper, president and CEO of Strategic Wealth Partners, informed CNBC’s “Trading Nation.” “FedEx has outperformed as of late, but I think a lot of that is really just a product of mean reversion.”
After lagging UPS for a number of years, FedEx shares had been “bound to catch up at some point,” Tepper mentioned.
“But FedEx, in my opinion, [has] a long history of kind of overpromising and underdelivering,” he mentioned. “They were actually on the ropes pre-Covid. … UPS, in my opinion, just flat-out executes better.”
Not solely does UPS have “one of the best management teams out there,” however the firm has extra publicity to the shopper, a key relationship in the age of the homebound net surfer, Tepper mentioned.
“I would stick with UPS here. I think that’s the better play of the two,” he mentioned.
TradingEvaluation.com founder Todd Gordon agreed, however famous that FedEx’s life-to-date return has been “much better” than that of UPS.
“FedEx has also done better from the Covid lows,” he mentioned in the identical “Trading Nation” interview, citing a chart.
FedEx’s primary drawback is its infrastructure, specifically the communication strains between its floor and air freight segments, Gordon mentioned.
“They need to sort of get that together,” he mentioned. “I think their margins have improved as they’ve relied on their ground game … and as we go back to the air, I think UPS might pick up. … So, I agree with Mark. FedEx has been a better performer. I think the UPS trade is where we’d want to stick.”
FedEx shares closed lower than half of 1% larger on Tuesday after hitting an all-time excessive. UPS shares fell practically 2%.
Disclosure: Tepper and Strategic Wealth Partners personal shares of UPS.