UPS To Increase Its Dividend By 10% And Reduce Its Shares By 5% [View article]
As long as the interest rates are low paying 3-4% dividend yield is a good way of keeping a stock floating. When interest rates at some point rise, UPS needs to find some real growth to keep investors from selling the stock.
UPS: How Well Can Brown Deliver For Investors? [View article]
I consider UPS a buy long term, because of the pricing power that the US duopoly with FedEx gives them. However I would be careful with buying it at this point. There are some significant roadblocks coming up, that can derail them short term. Firstly it looks like there are significant problems with the TNT acquisition. One indicator is that the TNT share is traded 15% below the offer that UPS made. It looks like UPS has not been able to make a convincing case to the European Commission. The Commission seems to think that UPS/TNT will achieve too high of a combined market share in the segment of long distance air deliveries. Their point is that there is only one other real competitor in this segment, DHL (Fedex is weak in Europe). UPS will most likely have to sell off parts of the air delivery network to get the EU to approve the deal. The question is if selling off assets erodes the entire business case. If the deal somehow falls through, I imagine there will be a short term drop in the share price (that may be a buying opportunity) The second thing to look out for is the Teamsters contract. The current deal expires next year, but the negotiations are starting now. It would be a surprise if UPS can close this quickly. If they can close quickly, and the terms agreed are reasonable, the stock may get a lift. In the scenario, where the negotiations drags out, I would expect both shareholders and customers to get anxious and the stock to suffer. If UPS is able to navigate these roadblocks reasonably well, I would consider buying, if the stock is still below 75.
I think you are right that it is a long term buy. UPS has got significant pricing power in the US (which is why Buffet likes it) and can raise rates 5-6% every year. If the deal with TNT goes through, they may get the same pricing power in the rest of the world. This would be a huge profit driver in the long run.
Manchester United: It Takes A Brit To Explain Why America Has Been Fooled [View article]
Man U should have a good platform for improving their results this year. They have landed some excellent sponsor contracts, which will drive revenue. Secondly last season they did not get out of the champ league group play. It will be a big surprise if they fail to qualify again. Getting into the last stages of the champ league will boost rev comparison with last year. On the cost site will the reduction of the debt mean a significant reduction in financial cost. Lastly and not to be forgotten, they will get a money injection from the japanese market after buying Kagawa.
Comparing FedEx With United Parcel Service [View article]
It will be interesting to see how the new trend of offering same day delivery options will impact the 2 companies. As far as I am aware none of the companies have an effective set up for same day delivery. E.g has Amazon, as a result of the change in sales tax strategy, chosen to open warehouses decentrally, which opens for the same day option.. If the trend is going towards same day deliveries managed from local warehouses, it could mean that local delivery companies, that are not in play for long distance deliveries, will be a larger part of the mix of e-tailers.
Novo Nordisk has build the foundation of growth for years to come, in a market that just keeps growing. They have an impressive pipeline that may be the best in the business. However given the high valuation of the stock there are some risk for investors. If Tresiba is not approved in the US, it will be a disaster for the share price. Furthermore are several related mix products tied to Tresiba. I imagine the approval will come - despite the cardio vascular risk - but investors need to be aware of the risk of FDA rejecting it - or requesting a warning text on the label. In terms of Victoza, that already has been successfully launched, there are still concerncs about thyroid cancer. If those concerns grow, that could be a problem for Novo. In terms of pricing of the products, Novo has a big challenge. The share price is based on expectations to margin expansion. Novo has just announced that there long term EBIT margin goal is 40%. This goal can come back to haunt them at a later point. Even though they have good products, it may be difficult for them to hold the line on prices and at the same time keep growing. An interesting fact that I heard the Novo CFO mention is that Novo gets 3 times as much for their products in the US as in Europe. This is due to different negotiation models. However the end result is that the user of e.g. Victoza in the US have to pay up to 400 USD per month. Needless to say that will limit growth. I imagine that Novo at some point will have to compromise on their pricing policy (and thereby margins) in the US to secure further growth in their most important market.
Novo Nordisk has undoubtedly hit a sweetspot with particularly Victoza. However, I would say there is risk in buying Novo Nordisk at these levels as many competitors are investing in bringing products into the market segments where Novo Nordisk dominate. Furthermore there are still people working to get Victoza pulled from the market due to side effects. If that happens the stock will fall like a stone.
The Delivery Battle: FedEx Or UPS For Your Portfolio? [View article]
What is the best buy probably depends on investment objectives. If you want a nice dividend every year, UPS is the way to go. If you want to invest in a growing company, I think FedEx is the better option.
UPS is becoming more and more of dividend focused company, similar to other companies that generate huge amount of cash, and have problems finding meaningful ways to invest them. As UPS is operating with very high profit margins, it is difficult for them to find ways to reinvest profits without undermining existing profit margins. It should be noted that UPS is a company that not has not seen any real growth in the number of packages organically in their home market over the last 5 years. If you compare UPS' current US volume with 2007, the numbers are very similar. Similar to companies in other industries, with a historically high market share, they have been more focused on defending margins than market share. Internationally there has been some package growth, but most of it has come from purchasing domestic delivery companies. Instead of being focused on growing number of packages, UPS has increased rates. In the US, I calculated that they have increased ground rates 12% (from approx 7,15 USD to approx 8,00 USD) over the last 5 years. The growth in rev pr package has given a decent profit growth, which has allowed them to increase the dividend from 1.68 USD in 2007 to 2.08 USD in 2011.
Fedex is a different story. They still want to grow operations, and as a result they choose to invest most of their profits in the company and not in shareholder dividends. In the US they have stolen a lot of ground market share from UPS the last 5 years, enough to compensate for decline they have seen on air shipments. FedEx will probably keep on stealing market share from UPS in the US. The question is if they also can do better internationally. In Asia, they have been doing ok. However in Europe, they have consistently been underperforming and are still a small player with only a few % of the market. It will be interesting to see if FedEx can pick up some cheap bits of TNT's european network. At this point, to save the TNT deal, UPS should have offered FedEx some relatively insignificant countries in East Europe, which FedEx declined. If UPS is desperate to keep the TNT deal alive, they may come back with some more important fractions of the TNT business, which could improve FedEx's situation in Europe dramatically.
UPS will reportedly consider sharing its network with European rivals in order to save the stalled bid to acquire TNT Express. After company officials expressed early optimism over sailing over regulatory hurdles, the path has become trickier over time. [View news story]
Difficult to believe it has come to this. With all the lawyers and lobby resources that UPS must have access to, they should not end in this situation. Sharing networks will allow smaller competitors to overcome the entry barriers that should protect the profit margins of UPS. Difficult to imagine this materializing.
Dividend Growth Investors Can Identify Long-Term Opportunities In Transport [View article]
Is your proposal to buy a stock long term for the dividend? I guess when the interest rates start to rise again at some point, people will start to sell off dividend stocks! Dividend yields of 2-3% only seem to be interesting short term.
3 ETFs To Consider After Jim Rogers Takes Moscow Job [View article]
It is interesting to see Jim Rogers taking the job in Russia. In the past he was talking about Asia as the place he wanted to focus his interest (and have his kids grow up there).
U.S. authorities are reportedly investigating Deutsche Bank (DB) and a number of its global peers for allegedly transferring billions of dollars through their U.S. branches for Iran, Sudan and other sanctioned countries. After the authorities have concluded their probe of StanChart, they'll move against Deutsche and three other European banks. [View news story]
It would be interesting to know the names of the other banks..
UPS To Increase Its Dividend By 10% And Reduce Its Shares By 5% [View article]
UPS: How Well Can Brown Deliver For Investors? [View article]
Firstly it looks like there are significant problems with the TNT acquisition. One indicator is that the TNT share is traded 15% below the offer that UPS made. It looks like UPS has not been able to make a convincing case to the European Commission. The Commission seems to think that UPS/TNT will achieve too high of a combined market share in the segment of long distance air deliveries. Their point is that there is only one other real competitor in this segment, DHL (Fedex is weak in Europe). UPS will most likely have to sell off parts of the air delivery network to get the EU to approve the deal. The question is if selling off assets erodes the entire business case. If the deal somehow falls through, I imagine there will be a short term drop in the share price (that may be a buying opportunity)
The second thing to look out for is the Teamsters contract. The current deal expires next year, but the negotiations are starting now. It would be a surprise if UPS can close this quickly. If they can close quickly, and the terms agreed are reasonable, the stock may get a lift. In the scenario, where the negotiations drags out, I would expect both shareholders and customers to get anxious and the stock to suffer.
If UPS is able to navigate these roadblocks reasonably well, I would consider buying, if the stock is still below 75.
Update: Be Cautious Of UPS [View article]
Manchester United: It Takes A Brit To Explain Why America Has Been Fooled [View article]
Comparing FedEx With United Parcel Service [View article]
Can Anything Stop Novo Nordisk? [View article]
UPS To Increase Its Dividend By 10% And Reduce Its Shares By 5% [View article]
Novo Nordisk's CEO Discusses Q4 2012 Results - Earnings Call Transcript [View article]
Novo Nordisk: Wait And Watch [View article]
The Delivery Battle: FedEx Or UPS For Your Portfolio? [View article]
UPS is becoming more and more of dividend focused company, similar to other companies that generate huge amount of cash, and have problems finding meaningful ways to invest them. As UPS is operating with very high profit margins, it is difficult for them to find ways to reinvest profits without undermining existing profit margins.
It should be noted that UPS is a company that not has not seen any real growth in the number of packages organically in their home market over the last 5 years. If you compare UPS' current US volume with 2007, the numbers are very similar. Similar to companies in other industries, with a historically high market share, they have been more focused on defending margins than market share. Internationally there has been some package growth, but most of it has come from purchasing domestic delivery companies. Instead of being focused on growing number of packages, UPS has increased rates. In the US, I calculated that they have increased ground rates 12% (from approx 7,15 USD to approx 8,00 USD) over the last 5 years. The growth in rev pr package has given a decent profit growth, which has allowed them to increase the dividend from 1.68 USD in 2007 to 2.08 USD in 2011.
Fedex is a different story. They still want to grow operations, and as a result they choose to invest most of their profits in the company and not in shareholder dividends. In the US they have stolen a lot of ground market share from UPS the last 5 years, enough to compensate for decline they have seen on air shipments. FedEx will probably keep on stealing market share from UPS in the US. The question is if they also can do better internationally. In Asia, they have been doing ok. However in Europe, they have consistently been underperforming and are still a small player with only a few % of the market. It will be interesting to see if FedEx can pick up some cheap bits of TNT's european network. At this point, to save the TNT deal, UPS should have offered FedEx some relatively insignificant countries in East Europe, which FedEx declined. If UPS is desperate to keep the TNT deal alive, they may come back with some more important fractions of the TNT business, which could improve FedEx's situation in Europe dramatically.
UPS will reportedly consider sharing its network with European rivals in order to save the stalled bid to acquire TNT Express. After company officials expressed early optimism over sailing over regulatory hurdles, the path has become trickier over time. [View news story]
Bank Of America: A Story Of Cheap Valuations And Rising Litigation Expenses [View article]
Dividend Growth Investors Can Identify Long-Term Opportunities In Transport [View article]
3 ETFs To Consider After Jim Rogers Takes Moscow Job [View article]
U.S. authorities are reportedly investigating Deutsche Bank (DB) and a number of its global peers for allegedly transferring billions of dollars through their U.S. branches for Iran, Sudan and other sanctioned countries. After the authorities have concluded their probe of StanChart, they'll move against Deutsche and three other European banks. [View news story]