Feed Me! Nom! Nom! Nom!
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Again, my friends, I must apologize for my scarceness on these pages. I know there are times when many of you may plead for my acquittal from this site, as there are times (due to my acute boredom and incipient ADD) I am here commenting like an Algonquin Round Table wag at the height of the Flapper Era. You must get sick of that.
But if December is always a rough month in my business, then the last week of December is often the grande chancre (sic) beyond all imaginings. It’s been ever thus, and it doesn’t matter if I take the week off from work or not (and I do, in the grand tradition of my own bosses past, thereby leveraging my subordinates and allowing me some time with the family), as the former “filter” I thought I had constructed has fallen, by steps, to the technological immediacy of first voicemail, then e-mail, and finally (shudder) Skype. And to think, this is not even a “capital gains lock-in” year. Oy.
To make matter worse, this has also been the traditional week when Mrs. Gint gets together with her Wyrd Sisters and our aggregate families (10 children in all) here in town. So between entertaining between 18-20 people (depending on when grandparents and great aunts/uncles/cousins arrive) a day/night, and juggling three live deals and one dying one via electronic media, I end up neglecting you, dear reader. Again, I beg your pardon.
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For those of you who were thinking that “The Stock of 2012” would be of the “precious” bent, well, good for you. Valuations are at 52 week minimums about now for most of my favourites and if you are a loyal subscriber to The PPT, you know that most are also reading “oversold!” in a big way as well.
(Aside: You are crazy if you are not taking advantage of this end of year special for The PPT, as the overall market hybrid alone has been knocking the cover off the ball for those using the patented “Fly Step-in Methodology” for entrance and exit).
Well, yes, this is a good time to be accumulating SLW, EXK and AG, and GDXJ for the new year, if only for an oversold bounce (if you are feeling chicken).
But this year’s Pick of the Year is going to be something you can put away for a longer to near terminal hold. It’s the tightest ship in the shipping bidness (sic)– United Parcel Service (UPS). I am biased, as I’m a long time holder of this King of the Transports (and the $TRAN weekly is looking very smart here, btw), but I think that 2012 may be the year that UPS finally “breaks through.”
Fundamentals are not my bag, so I won’t belabor them, but it is important to note that UPS is the market leader in package transport, with over 15 million pieces moved a year (over double that of rival FDX). What’s more, despite its unionized work force (Teamsters and Independent Pilots Union), UPS manages to eke out considerably better margins (about 350 basis points better) than the flashy FedEx purple people, most likely due to its entrenched market presence and it’s flexibility in trucking delivery (for example, UPS delivers 1-day, 2-day and regular business deliveries all from the same vehicle route, while FedEx uses wholly different carriers for the different delivery times).
Of course UPS also offers a fatter dividend. At 2.80% at current market prices (and I’d like to buy it closer to 3.0% anyway), it is about 220 basis points better than rival FDX. UPS is a cash cow, with $3.5 billions in free cash to either reinvest in new planes and trucks or to mail back to shareholders. UPS also uses that cash to buy back shares, which is of course accretive to overall value.
But UPS is also a great hold for the future, as well. Any good wife will tell you… the wave of the future is internet delivery of just about everything. And if you love AMZN, God bless, they are a great company, but by no means impregnable from a barriers to entry standpoint. Now, how would you like to try to start up a rival package delivery service that will meet up to Amazon’s exacting demands (not to mention your mother in law’s)?
See where I’m going with this?
Last but not least, from a technical standpoint, UPS is again nearing all time highs, which it will eventually have to surmount. Like one of my better gold picks this year– AUY–, UPS has been attempting to break that “lid” at $75 for while now. If earl prices remain somewhat accomodating, then I think this may be our year. Note my weekly, which shows the formation that marks the $TRAN itself… a 13-week/34-week EMA crossover (the weekly “golden cross”) and an attempt at breaking to new highs:
And my daily chart shows where I’d like to enter… at the 20-day EMA, if possible:
And that is all for now, boys and girls. I will be back with some predictions for 2012… I hope before the dawning of that auspicious, and seemingly most pre-benighted year.
Best to you all.
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Great post and pick. Thanks.
good call senator.
I should also mention that I feasted on some ANV today for the first time in a while. I think it has double bottomed here…
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UPS is the other end of the US Postal service see-saw
They may become the USPS, if plans work out…
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Agree that UPS could be a good pick going forward. UPS is consistently a little more expensive than FedEx whenever I compare rates for shipping regular ground service which explains some of their higher margins. Although I usually don’t use them because of this, I would guess most people don’t bother to compare rates. I also think FedEx hasn’t done the best job of advertising their regular ground service and 24 hour drop off locations at FedEx Kinkos and most people probably still think of FedEx as only overnight delivery.
Kinko’s is one expensive mailbox purchase.
Their “dual truck” (one for overnight, one for regular delivery) methodology seems nutty too.
I guess that’s what happens when you go from “overnight” to “everything,” as opposed to the other way ’round.
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UPS purchased Mailboxes,Etc. back in 2001 (or 2000, can’t recall) but from what I remember got it at a good price and gave them an in into more internet commerce.
Fed Ex buying Kinkos played copy cat, although I suspect the integration and valuation wasn’t as good as the UPS purchase.
The Kinko’s buy was way more expensive.
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They also have consistently raised the dividend.
Just wondering, you point out the declining volume on the uptrend. Wouldn’t that be a bearish divergence from the price movement?
It would be, but since it’s on the daily, I am not concerned. I think it needs to come back down to the $71-$72 area anyway, as that’s where I’d like to buy it.
Of course, declining volume this week is largely meaningless, as the whole market is sucking wind.
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thumbs down, apparently.
I actually thought I saw you on ESPN2 at the Georgetown-UL game last night leaving at the .22 mark (UL screwed up the last minute or so).
You were wearing red eating extra crispy at the KFC Center (when was the name changed?).
I picked up some PAAS early this AM as well as SSRI as they were the most wiped out and the tax selling abatement should allow a nice bounce (which it did this PM) and hopefully tomorrow.
I’ll be out by eod Fri. at the latest.
Your are too funny w. your day trading.
I actually did not make the game last night due to work, which is prolly why they lost.
It’s always been called the KFC Yum! Center since it opened last year.
Nice place for college hoop.
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and what about all the rest of the predictions for 2012?
Who is going to win the Presidential election for instance?
If you read the above, you will have your answer.
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Jake,
If this Straight of Hormuz situation blows up into a regional war, It is going to really hurt UPS in fuel costs.
And , the public will be less inclined to order useless crap off of amazon.
They will be busy buying MRE’s, rather than ordering blu ray box sets of “entourage”
Oh yeah, right, the public buying MRE’s? Come on, where do you guys get this stuff. I hope you’re joking but the rest of your post was serious.
In 3 years of bluster and threats, Iran has never threatened to shut the hormuz straight pre-emptively.They’ve always said it would only be in retaliation , if they are struck first. So, we are closer to an “incident” than ever before. An incident that would mean oil shooting past 150 in a matter of days of hours.
All hyperbole aside, people WILL pullback on buying discretionary crap from mail order sites, in the event of a regional war. The gas price sticker shock would force them to.
There is a 90% chance nothing happens. But, there is a 10% chance we end up with oil racing towards 200, and a Dow rocketing down to test 9000.
That is as simple as I can make the situation, without adding drama.
All due respect, you are not adding much. If you read closely you will note that I cavested the oil price.
Seriously, if you think Iran is going to affect the markets next year, all bets are off, but you have to recognize that you are not far from the kooks in the Cold War who predicted Nuclear Armageddon every year for the duration.
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Point taken, Jake
I should probably actually add some value, in terms of what I would swing long here:
And that is simple:
I’d suggest looking to go long areas that have become undervalued, due to current sentiment extremes:
IXG EUFN Global financial sector
VGK europe
DGS GWX small cap emerging markets
REMX rare earths
I still like DBA and CORN food on pullbacks. If we can get any pullbacks
Nice yield on that VGK… and REMX is a nice “return to the mean” idea… it being down almost 28% this year.
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Jake,
I noticed that you are basically averaging down or at least that what this newbie thinks you are doing. And it makes sense if you bought when you did some time ago. But, and this is a serious question, how do you come to that conclusion, i.e., average down or cut losses. Thanks, just trying to understand some of your mental processes, which I hope to eventually incorporate in my trading.
Since early 2009, there has been no PM pick I’ve made where I “average down,” as I’ve owned all of them lower than this, some a tonne lower.
That said, I just try to keep some cash handy because I’m not smart enough to gauge every fluctuation. Until the bull market in PMs is over, that will remain a winning strategy.
If I buy something newer (like AUY for example) then I will not add after that initial buy (which may be over a number of days, so technically some of that may be a bit “averaging down”) until the stock is higher than the initial point.
As you well know, I never sell “all,” of anything, though I came pretty close with ANV once.
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I think your figure of 15 mil. packages per year is wrong, perhaps 15 mil. daily. Stock has not performed as well since they went public, when it was private, it was wildly popular with employees as it went to 100 and split on a regular basis. Not so anymore, but still the tightest ship. When they had the DC8’s I remember being told that one container full of packages would pay for the flight and the other 17 was pure gravy. Plus what was in the bellies. As long as there are products to ship this should be a solid winner, and there in your own back yard, Jake, so you can keep an eye on them.
You are correuct (sic), it’s 15.6 mm packages daily… I had a brain fart.
And you are correct about the performance since the IPO, but you must also remember (and I was witness to this, as we were Brown share holders) that they were originally going to sell the stock at $25, but the bid volume on the pre-orders for the IPO was so high that they split the stock (taking one share to two at, presumably, $12.50) and then went public at $50!
So about five years plus of appreciation went into that initial day. That goes toward Fly’s theory about IB capital markets guys screwing the public shareholder, but it is not much of a reflection on the company.
The Brown shareholders just got a very early Christmas package, is all.
My point today is that all of that “early value” has been digested, and now UPS if finally ready to break that $75 long term cap (which, for we Brown shareholders is a 500% gain from the IPO) and “take to the skies.”
I would argue, therefore, that UPS has grown somewhat consistently over the years, but that the value of that stock growth was “forward delivered” in the stock price by the nice investment bankers at Golden and Morgan at the time of the IPO.
Believe me, I keep an eye on them… they are making our airport one of the busiest in the country on their dime. Area’s largest employer as well.
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Great year end picks -$EXK (Trades a point like a clock and good volume for size).$ERX has been a winner this month.You have hd the hand. Thanks
Out PAAS,SSRI for nice 6-8% end of year shenanigans.
You are the master.
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No doubt, TC, good call. I wish I would have taken that trade, too, and went back and forth over it quite a bit, but it is just too short of a time frame for me.
@Jake, I am so surprised at your pick, and not because it is UPS, because I remember from the early days that UPS was your favorite company.
Why I am surprised is that you said quite often to watch UPS to see which way the market was going to go.
I take this as a sign that you are optimistic about the direction of stocks in 2012, and not just the PM’s. (you do feel that the PM stocks will follow the market going forward?)
Here’s to you and your (large) family having a great holiday season! 🙂
Actually, you don’t even have to answer that question, because I didn’t really mean it as a question, it just seems an optimistic move and statement to me (you picking UPS.)
Yay! Optimism.
Jake,
Nice picks..
Nappy New Year!
Mr.P
I have to say that I just took that customer survey for the fifth time, and it finally took me all the way to complete.
It was getting pretty frustrating. The first few times the page wouldn’t even load, and then the next couple of times I took the survey I got almost to the end when there was a malfunction. But, they finally must have gotten their bugs out. Just an FYI.
I know … it kicked me out in the middle of it when I was doing it too… I would ask for my money back if I were le Fly.
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Also, Jake had mentioned meating with someone from Teavana who said it was going to be big and to get in on it. At least, I think it was Jake. And I wanted to relay my experience with it, and that if I knew for sure the great depression wasn’t coming, it would have been my number one non PM pick.
Last year, I never would have considered it, but the other day I remembered that when my 16 yo daughter was home from school last spring she wanted to go in there and buy some tea. It was like $12/oz with a minimum of 2 oz’s to buy.
At first I said no way, but they had these samples and it was really good, so I finally bought her some to take back to school with her.
Then the other day I was at the mall and walked past the store and it was just packed with people. They still had the two canisters by the front door with the free samples, that you can poor yourself, so you don’t have to feel embarassed to stand there gulping down free samples. I went inside after and they had the coolest cast iron tea pots, with tea lights underneath keeping the pots hot. These were all filled with different types of tea to sample, too.
I almost bought one of those tea pots and they were very pricey, but I kept thinking how cool it would be to have one of those filled with some tasty chai on the table with some of their pretty tea cups for when people stop by. And I don’t usually buy anything I don’t have to have, so that tells you how cool those pots were.
After I got home I googled to see where I could get the same stuff cheaper, and what I found was that there are blogs all over the place with people giving reviews of all these different types of teas. I mean just like wine tasters, with the “starts with a woodsy note that bursts into blossomy and ends with a hint of vanilla”. Hundreds of different reviewers all saying stuff like that.
And then with the Fly going on about his tea…
Might be that guy from Teavana is right.
For the record, I had a meal with one of TEA’s original investors… he was very high on them, but who wouldn’t be after a 25+ bagger, right?
I wouldn’t take that as any kind of unbiased affirmation…
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No, but they are very small yet, with only 185 stores in 34 states, and some in Mexico, according to the stats I read. They are just beginning, and having huge success.
I was a huge fan of Starbucks for the non-alcohol crowd, and Starbucks is still going strong, dispite what all the naysayers were saying about it being over priced and not being able to withstand the rapid growth and recession. And look how it has withstood.
With tea, you get a whole different crowd, with the health aspects. And there is a whole lot more you can do with tea. The bloggers/reviewers I read were not only going on and on about the different layers of flavor and notes, but how they were brewing it.
And with the growth in the U.S. of Traditional Chinese Medicine (TCM), and it’s success with treating diseases and conditions…
I think I am jumping on this bandwagon. The Oolong tea is fermented, or partially fermented. There is a whole school of thought on the benefits of fermented foods and teas alone. And this is becomming huge on it’s own. And Oolong tea is just one type of tea. You have the green, black, white, chai, fruity, etc.
And then you have the on the fringe crowd, they don’t like coffee or alcohol. I think it’s a great market, and great timing, provided the economy doesn’t get worse, and people can still spend money next year.
A 25 bagger, hey? The lucky sob.
I can’t edit or I would correct my grammar and poor spelling.
Jake the reason I like UPS is I remember the picutre of the girl in Brown you posted last year or so… :-))