27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Based on an underappreciated free cash flow outlook, analysts upgraded United Parcel Service, Inc. (NYSE:UPS).
The Analyst
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Raymond James analyst Patrick Tyler Brown upgraded UPS from Market Perform to Strong Buy with a new price target of $150.
The Thesis
This upgrade was driven by the market’s underappreciation of UPS's long-term domestic earnings and free cash flow projections.
Brown anticipates earnings amounting to $5.7 billion by 2021, based on specific company factors such as:
- The “peel off” of over $200 million in operating penalties.
- Smart Global Logistics Network and over $900 million in cost savings.
- A benefit of $150 million from the company’s retirement plan.
- Organic growth, including up to 3 percent pricing and single digit volume gains.
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Domestic growth aside, Brown remains optimistic of international business, as well.
“While much less noisy, we believe the international pipeline remains ripe, anchored by UPS’ European operations where investments (~$2B) in a panEuropean network continue to bear fruit,” Brown said. “Further, given favorable package characteristics (larger mix of B2B), increased demand in premium (higher priced) products, & ample opportunities in Asia (also owed to the JV with SF Express), we surmise strong international EBIT growth will persist through the decade- absent a draconian change in trade policies.”
Incremental upsides, such as positives from transformation, the new five-year teamster contract and a possible discount rate reversal remain possible, Brown said.
Price Action
UPS shares were up marginally at $123.88 Tuesday afternoon.
Related Links
Analyst: UPS Network Overhaul Could Improve Margins
UPS Pilots Keyless Deliveries In New York City
Public domain photo via Wikimedia.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.