Trade-Ideas: United Parcel Service Inc (UPS) Class B (UPS) Is Today's Momo Momentum Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified United Parcel Service Inc (UPS) Class B ( UPS) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified United Parcel Service Inc (UPS) Class B as such a stock due to the following factors:

  • UPS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $207.5 million.
  • UPS has a PE ratio of 102.5.
  • UPS is currently in the upper 30% of its 1-year range.
  • UPS is in the upper 25% of its 20-day range.
  • UPS is in the upper 35% of its 5-day range.
  • UPS is currently trading above yesterday's high.
  • UPS has experienced a gap between today's open and yesterday's close of 0%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on UPS:

United Parcel Service, Inc., a package delivery company, provides transportation, logistics, and financial services in the United States and internationally. It operates in three segments: U.S. Domestic Package, International Package, and Supply Chain and Freight. The U.S. The stock currently has a dividend yield of 2.7%. UPS has a PE ratio of 102.5. Currently there are 10 analysts that rate United Parcel Service Inc (UPS) Class B a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for United Parcel Service Inc (UPS) Class B has been 3.1 million shares per day over the past 30 days. United Parcel Service Inc (UPS) Class B has a market cap of $65.8 billion and is part of the services sector and transportation industry. The stock has a beta of 0.72 and a short float of 2.6% with 8.17 days to cover. Shares are up 23.8% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates United Parcel Service Inc (UPS) Class B as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.3%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $1,673.00 million or 6.56% when compared to the same quarter last year. In addition, UNITED PARCEL SERVICE INC has also modestly surpassed the industry average cash flow growth rate of 5.96%.
  • UNITED PARCEL SERVICE INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, UNITED PARCEL SERVICE INC reported lower earnings of $0.80 versus $3.83 in the prior year. This year, the market expects an improvement in earnings ($4.75 versus $0.80).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Air Freight & Logistics industry and the overall market, UNITED PARCEL SERVICE INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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