Buyers and sellers always look up to the holiday season. Despite the high inflation, consumer spending has remained resilient. According to the Commerce Department, consumer spending increased 0.8% sequentially in October, posting its highest gain since June. Also, the U.S. Census Bureau reported that the overall retail sales in October rose 1.3% sequentially and 8.3% year-over-year.
Although high inflation is plaguing consumers, holiday spending is expected to remain robust. According to the NRF, holiday retail sales during November and December will grow between 6% and 8%.
As the holiday season approaches, shopping is bound to surge. The shipping industry will benefit from increased demand for goods during the holiday season. According to a Brandessence Market report, the container shipping market is expected to reach $11.40 billion by 2027, growing at a CAGR of 8.6%.
Given this backdrop, it could be wise to invest in fundamentally strong shipping stocks United Parcel Service, Inc. (UPS), Universal Logistics Holdings, Inc. (ULH), and Bristow Group Inc. (VTOL).
United Parcel Service, Inc. (UPS)
UPS provides letter and package delivery, transportation, logistics, and related services worldwide. It operates through two segments, U.S. Domestic Package and International Package.
Over the last three years, UPS’ dividend payouts have grown at a 16.6% CAGR. Its four-year average dividend yield is 2.88%, and its forward annual dividend of $6.08 per share translates to a 3.47% yield. It paid a quarterly dividend of $1.52 per share on December 1, 2022.
On November 16, 2022, UPS completed its acquisition of Bomi Group. The acquisition will add temperature-controlled facilities in 14 countries and 3,000 highly-skilled employees to the UPS team across Europe and Latin America.
Executive Vice President and President of UPS, Healthcare and Supply Chain Solutions, Kate Gutmann, believes that the combined team, vehicles, and advanced facilities will allow UPS to expand the company’s pan-European cold chain network and bring the next generation of healthcare logistics solutions to its customers.
For the fiscal third quarter ended September 30, 2022, UPS’ revenue increased 4.2% year-over-year to $24.16 billion. The company’s non-GAAP operating profit increased 6% from the year-ago period to $3.15 billion. Its net income increased 9.6% year-over-year to $2.61 billion. In addition, its adjusted EPS came in at $2.99, representing a 10.3% increase from the prior-year quarter.
Analysts expect UPS’ EPS and revenue for the quarter ending December 31, 2022, to increase 0.5% and 1.2% year-over-year to $3.61 and $28.09 billion, respectively. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 5.7% to close the last trading session at $175.10.
UPS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #8 out of 17 stocks in the A-rated Air Freight & Shipping Services industry. It has an A grade for Quality and a B for Stability.
We have also given UPS grades for Growth, Value, Momentum, and Sentiment. Get all UPS ratings here.
Universal Logistics Holdings, Inc. (ULH)
ULH provides transportation and logistics solutions in the United States, Mexico, Canada, and Colombia. It offers truckload services; domestic and international freight forwarding, customs brokerage services; and final mile and ground expedite services.
Over the last five years, ULH’s dividend payouts have grown at an 8.5% CAGR. Its four-year average dividend yield is 2.01%, and its forward annual dividend of $0.42 per share translates to a 1.16% yield. It is expected to pay a quarterly dividend of $0.11 per share on January 3, 2023.
For the fiscal third quarter ended October 1, 2022, ULH’s total assets increased 5.4% to $1.20 billion, compared to $1.14 billion for the fiscal year ended December 31, 2021. Its total operating revenues increased 13.5% year-over-year to $505.69 million, while its net income increased 371.9% year-over-year to $48.48 million. In addition, its EPS came in at $1.84, representing a 384.2% increase from the prior-year quarter.
For fiscal 2022, ULH’s EPS and revenue are expected to increase 90.3% and 15.4% year-over-year to $6.40 and $2.02 billion, respectively. ULH has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 91.8% year-to-date to close the last trading session at $36.18.
It is no surprise that UHS has an overall rating of A, translating to a Strong Buy in our proprietary POWR Ratings system. It is ranked first in the same industry. In addition, it has an A grade for Growth and a B for Value, Momentum, Stability, and Sentiment.
To see ULH’s rating for Quality, click here.
Bristow Group Inc. (VTOL)
VTOL provides aviation services to integrated, national, and independent offshore energy companies in the United States and operates internationally. It also offers commercial search and rescue services and helicopter and fixed-wing transportation services.
On August 3, 2022, VTOL completed its acquisition of British International Helicopter Services Limited (BIH), further enhancing its leading global Government Services offering. VTOL’s President and CEO, Chris Bradshaw, said, "We will now build off BIH's longstanding history and strong relationships with the U.K. Ministry of Defence and will continue providing safe and reliable service to both military and civilian markets."
For the fiscal second quarter ended September 30, 2022, VTOL’s total revenues increased 1.8% year-over-year to $307.27 million. The company’s operating income increased 17.7% year-over-year to $14.68 million. Its net income attributable to VTOL increased 495.2% year-over-year to $16.52 million. Moreover, its EPS came in at $0.58, representing a 314.3% increase from the prior-year period.
VTOL’s EPS and revenue for the quarter ending December 31, 2022, are expected to increase 65.2% and 9% year-over-year to $0.27 and $322.35 million, respectively. Over the past month, the stock has fallen 4.6% to close the last trading session at $25.58.
VTOL’s POWR Ratings reflect solid prospects. The stock has an overall rating of B, which equates to a Buy. Again, it is ranked #5 in the Air Freight & Shipping Services industry. In addition, it has an A grade for Momentum and a B for Growth and Value.
Click here to see the additional ratings of VTOL for Stability, Sentiment, and Quality.
UPS shares were trading at $176.25 per share on Wednesday afternoon, up $1.15 (+0.66%). Year-to-date, UPS has declined -14.29%, versus a -16.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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