After a 2013 shipping debacle left Amazon vowing to never again to use FedEx or UPS, there are rumors that Amazon could launch its own delivery service. The fear of an Amazon third party logistics service has been damaging to UPS and FDX. But we have to remember that Amazon still relies very heavily on the two shipping giants, because let’s face it. Logistics isn’t easy…
And we have to consider that the absence of Amazon may not be terribly damaging to the bottom line of UPS or FDX. Over the last 12 months, UPS generated $58 billion in revenues. FDX generated $48 billion. Amazon had shipping costs of $10.4 billon, which tells us a loss of Amazon wouldn’t be as bad as many believe.
And even if Amazon does launch a third party logistics service, it won’t happen for quite some time. Logistics is no easy task.
Technically, UPS and FDX have found solid support after their latest tumble, as well.
After finding double bottom support just above $140 with oversold reads on MFI, MACD and RSI, FDX is just beginning to bounce back. We’d like to see a move to at least $160, near-term. Consider buying to open the FDX February 2016 150 calls up to $5.60.
UPS has also found historical support just above $96 a share with oversold reads on MFI, MACD and RSI, too. We’d like to see a move to at least $102. Consider buying to open the UPS April 2016 97.50 calls up to $4.60 and / or the February 2016 97.50 calls up to $3.40.
Have a very happy holiday… and a happy, healthy, profitable New Year…
Ian L. Cooper
Forgotten Profits