United Parcel Service, Inc. (UPS): A Bull Case Theory

We came across a bullish thesis on United Parcel Service, Inc. on Value investing subreddit by Charrasta. In this article, we will summarize the bulls’ thesis on UPS. United Parcel Service, Inc.'s share was trading at $88.82 as of August 22^nd. UPS’s trailing and forward P/E were 13.22 and 13.76 respectively according to Yahoo Finance.

UPS presents a cautious buy opportunity at current levels around $87.80, reflecting an extremely oversold condition with attractive value characteristics for patient investors. While traditional fundamental analyses using Buffett, Lynch, and Graham models produce mixed signals, UPS’s combination of a 7.46% dividend yield, reasonable 13.0x P/E ratio, and strong return metrics—34.6% ROE and 8.3% ROA—creates a compelling risk/reward profile. The company’s debt-to-equity ratio of 1.53 is elevated but manageable, and current liquidity at 1.17 is below optimal, highlighting the importance of a measured investment approach.

UPS’s competitive moat is anchored in its extensive logistics network, particularly in B2B and healthcare delivery, though it faces intensifying competition from Amazon Logistics, which now controls 25-28% of U.S. parcel volume and is projected to surpass USPS by 2028. UPS is proactively reducing Amazon-related volume by 50% through 2026, a near-term headwind intended to focus on higher-margin clients and strengthen long-term profitability. The stock’s entry strategy favors $84-$87 near 52-week support, with an aggressive range of $78-$82 and a stop loss at $79, while upside targets include $101, $114, and a long-term range of $130-$150 based on fundamental recovery.

The investment thesis emphasizes that UPS, despite short-term pressures and cyclical challenges, offers a high dividend yield as income support, potential capital appreciation, and a strong competitive position, particularly for investors with 2–3 year horizons. Risks include continued Amazon market share gains, possible dividend adjustments if leverage rises, economic softness affecting shipping demand, and trade policy uncertainties. Overall, UPS is a cautious buy suited for dividend-focused investors seeking value and patient exposure to a cyclical turnaround.

Previously we covered a bullish thesis on FedEx Corporation (FDX) by Daan Rijnberk in September 2024, which highlighted the company’s strong market position, cost-saving initiatives, and attractive valuation relative to peers. The company's stock price has depreciated approximately by 20.58% since our coverage, reflecting short-term market pressures. The thesis still stands as FedEx executes efficiency programs. Charrasta shares a similar focus on the logistics industry but emphasizes UPS’s oversold condition, high dividend yield, and strategic measures against Amazon competition.

United Parcel Service, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held UPS at the end of the first quarter which was 59 in the previous quarter. While we acknowledge the potential of UPS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None.