Two To Go: A Pair of Delivery Stocks for Investors
Monday December 24, 12:47 pm ET
By TradingMarkets Research

Both FedEx and UPS are members of the Air Delivery and Freight Service industry. In fact, while there are other candidates on the stage with them--companies like C.H. Robinson Worldwide (NYSE:CHRW - News) and Pacer International (NYSE:PACR - News)--FedEx and UPS are clearly the front-runners in the freight business. And when investors are looking for stocks that are likely to be higher a year from now, they can hardly go wrong by picking the top stocks in industries that are on the move.

Just about everyone is familiar with FedEx and UPS. FedEx is based out of Tennessee, and is increasingly seen as a network of supply chain, transportation, business and information services under popular and widely recognized brand. Although the company has its origins in 1913, the company most investors know as FedEx was founded in 1971 with 389 employees working around the clock to establish the first modern, combined air and ground express delivery company.

With an industry PowerRating of 8, the Air Delivery and Freight Service industry group is truly one such industry. Based on our research, looking back at thousands and thousands of simulated trades between 1995 and 2006, we discovered that industries with a PowerRating of 8 outperformed the average industry by a wide margin. While 8-rated industries managed to produced average, annualized returns of 20.26% since 1995, the average industry's performance was more than 500 basis points lower at 14.61%.

Sitting at the top of this industry, FedEx and UPS share the same PowerRating: 8. As 8-rated stocks, both FedEx and UPS belong to that category of equities that historically been higher one year later more than 74% of the time. Compare this to the average stock which has been higher one year later less than 68% of the time.

When it comes to delivering packages, many people have a preference for either FedEx (NYSE:FDX - News) or United Parcel Service (NYSE:UPS - News). But increasingly, when it comes to delivering above market returns on stocks, investors are likely to be pleased regardless of which company they choose to invest in.

8-rated stocks also have performed well beyond their more ordinary peers after a year. Stocks with an 8 PowerRating have gained, on average, more than 18% after a year's time. The average stock, after a year, has tended to gain between 12-13% in a year.

When you put together the excellent industry rating of 8 and solid stock PowerRatings of 8, you tend to have a recipe for outperformance, as the statistics above suggest. This is why one of our main recommendations for investors looking to use PowerRatings.net to help them improve their stock portfoios is not just to look for high PowerRatings stocks (though that is an indispensible part of the process). But also, we encourage those investors using PowerRatings.net to make sure that the high PowerRatings stocks they select also come from industries with good-to-great PowerRatings of 7, 8, 9, or 10. Our historical research tells us that this combination--a high investors PowerRating coupled with a high industry PowerRating--is very much a winning one, and the best way to take advantage of what I call the "good house in a good neighborhood" syndrome.

Since then, FedEx has grown into a truly worldwide network offering ever-more specialized services--from freight transport to office/printing services--to an ever-expanding customer base. The company today employs just shy of a quarter million, full-time workers and has revenues in excess of $9 billion as of August 31, 2007.

United Parcel Service is also based south of the Mason Dixon line, being headquartered in Atlanta,Georgia. The company was originally created as a messenger service out of Seattle, Washington in 1907. It was not until 1919 that the company expanded beyond Seattle and changed its name to United Parcel Service--six years after getting their first delivery car, a Model T Ford.

Since then UPS has grown into a worldwide corporation and the largest package delivery company in the world, serving more than 200 countries and territories. The company recently reported revenues of more than $12 billion as of the third quarter 2007.