Wednesday, March 5, 2014

Time to buy UPS and FedEx?

The share prices of package-delivery giants UPS (NYSE: UPS  ) and FedEx (NYSE: FDX  )  have been down in the high-single digits in 2014. Essentially, the market is punishing them for a difficult Christmas period when high-profile delivery delays disappointed consumers and online retailers alike. Has this created a buying opportunity in UPS and FedEx?

UPS and FedEx have been unfairly criticized
The widely publicized problems with Christmas deliveries led to UPS and FedEx receiving substantive amounts of criticism, but investors need to appreciate that the issues were partly caused by an unusual confluence of incidents. From an investment perspective, the main concern is that the problems were somehow systemic, which would necessitate greater investment in order to rectify them. On the other hand, investors need to bear in mind the following points about recent events: