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By Matthew Carr

One of my core tenets in investing: “All I can say with any certainty is that something bad will happen at some point in the future.”

Now, that’ll probably never get me quoted as often as Warren Buffett, George Soros, or John Templeton. But it’s simple, elegant and effective.

At the heart, I believe in crisis investing – looking for opportunities during disasters, sell-offs, downturns, or outright market implosions to get the biggest bang for my buck, using broader investor panic as an advantage. And right now is one of those times.

The Dow Jones Industrial Average is suffering through a 600-plus point fleeing by investors, with the vast majority of stocks on the decline. There’s panic in the streets… Or more specifically, panic on Wall Street.

And like Buffett believes, these are the times we look to buy… especially with third-quarter earnings season right around the corner.

Autumn “Panic” or Opportunity?

Let’s cut to the quick: September and October are notoriously volatile months for the markets.

They’re populated with the ghosts of ominous days like, “Black Monday,” “Black Tuesday,” “Black Thursday” and “Black Friday…”

All we’re missing is a “Black Wednesday” and we’d have a full week of historic disastrous trading days that took place in those two months.

Looking back through history, of the top 10 largest point drops ever in the market, six of those happened in September and October. And between 2000 and 2010, September finished in the red six times.

But this really isn’t a groundbreaking revelation… The concept of “Autumn Panic” goes back to before the modern stock market even existed. And there are countless theories that have tried to pinpoint the reasons for this.

Here’s the deal though: In the last 10 years, October has only followed a September loss with a loss of its own twice. Once for a minimal decline (0.05 percent) in 2004, and the second time in 2008.

So I consider this current sell-off more of an opportunity than the beginning of the apocalypse or the end of America. And even better, the opportunities don’t have to be exotic. Because when we’re in a volatile market like this, we want stability.

A Contrarian Approach to Dividend-Paying Stocks

In my other publications, we’ve been banging one particular drum for a while now: dividend stocks.

These are the true safe havens – not gold.

Dividend-paying stocks consistently outperform the market and, as a whole, trump the performance of non dividend-paying stocks.

But not all dividend-payers are created equal…

  • We want to focus on companies that pay a dividend that outpaces inflation (which is currently around three percent).
  • And we want to target companies in industries that have growth and where earnings per share are more than the dividend yield (so we avoid the risk of having the dividend cut).

So, where do we begin? Well, with a little bit of a contrarian approach…

On Thursday, FedEx (NYSE: FDX) had the unfortunate luck of the draw to release its earnings on the back of the Fed’s warning for the U.S. economy and growing concerns about the global economy. Sales for the world’s largest cargo airline operator and second-largest package delivery company rose 11 percent to $10.5 billion, and foreign shipments climbed 38 percent. Its earnings per share even narrowly beat out Wall Street estimates… And yet the stock tumbled nine percent because it lowered its full-year earnings outlook by $0.10 per share.

Now, FedEx has already had a tough go, falling nearly 30 percent year-to-date – three times the drop of the S&P 500.

But I like parcel delivery companies, particularly in light of the current woes of the U.S. Postal Service.

That’s why I think investors should be looking at FedEx’s rival, United Parcel Service (NYSE: UPS).

  • Like FedEx, UPS is trailing the S&P, but not as drastically – down 14 percent year-to-date. But, what I think makes UPS more attractive is that it pays a dividend of $2.08 per share, which at the company’s current share price, is a yield of 3.3 percent.
  • Add on top of that, UPS repurchased 14.4 million shares and increased its dividend payout by 10.6 percent this year. Its dividend is now three times what it was when initiated in 2000. And it plans to buy back $8 billion between 2012 and 2014.
  • In the second quarter, UPS’ earnings per share increased 25 percent to the highest level the company ever recorded for the second quarter, while total revenue moved up 8.1 percent.

UPS is currently caught in the undertow of FedEx’s lowered global outlook. But it emerged from the recession stronger and leaner. The company’s cash position increased from $3.25 billion in the second quarter of 2010 to $5.64 billion at the end of the second quarter this year.

So I think now’s a good time to get in cheap…

Doing Our Holiday Shopping Now

We’re also heading into the holiday shopping season. And the largest online shopping day – Cyber Monday – is on the horizon on November 28.

For those who don’t know, Cyber Monday began in 2005 and is a coordinated effort by retailers to offer consumers deals for online purchases. It gets bigger and bigger each year.

  • In 2006, Cyber Monday generated $610 million in sales.
  • In 2008 and 2009 – during those dismal Great Recession days – Cyber Monday sales increased to $846 and $887 million.
  • And last year, sales on Cyber Monday topped $1 billion.

That means, in the last five years – despite a recession – sales on Cyber Monday grew 68 percent.

One of the things getting lost in the rhetoric over a possible double-dip recession and falling consumer sentiment is that this year, retail sales are up more than seven percent. Comparing June to August 2011 to the same three-month span in 2010, total retail sales are up eight percent. Meanwhile, electronic and mail-order sales for the first eight months of 2011 are up 13.3 percent.

The other aspect I like about UPS is that it drastically expanded its distribution agreement with Merck (NYSE: MRK) in June. To support Merck’s manufacturing, UPS is constructing new distribution centers in China and Brazil to deliver Merck’s pharmaceuticals. And domestically, UPS will handle the majority of Merck’s deliveries, as well as those in Europe and Latin America.

I think UPS is in a much stronger position than FedEx. In the near term, there may be some softening. That’s why I’d rather buy in now while UPS is near its 52-week low. UPS is projecting revenue growth between six and eight percent over the next five years and expects free cash flow to top 100 percent of net income in 2012. Over the long term, there’s great upside, and it pays a 3.3-percent dividend to boot.

Disclosure: Investment U expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees and agents of Investment U (and affiliated companies) must wait 24 hours after an initial trade recommendation is published on online - or 72 hours after a direct mail publication is sent - before acting on that recommendation.

Source: UPS: It's Time To Go Shopping