Shipping stocks like Stamps.com could get a RTS this week

Knock knock, it’s the Presidential task force for shipping and mailing, and they have a sealed package. No, it’s not a stuffed llama from a forgotten Shopify ($SHOP) purchase, it’s a recommendation on US Postal Service rates.

A major target of the White House as of late as been Amazon ($AMZN), and a tweet sent on 3/21 from the President’s Twitter account sum up the current administration’s feeling towards the company. The tweet states (in part) “it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon.” (Link to Tweet: https://twitter.com/realDonaldTrump/status/980063581592047617)

Surprises from this Postal Task Force could have an impact on the recent target Amazon, but could affect companies (obviously) like FedEx ($FDX), UPS ($UPS), and the above mentioned Stamps.com ($STMP).

Why the USPS is losing money on shipping

The USPS is losing money for several reasons, most notably the ones below:

  • Email has significantly reduced the need to send paper letters, with the majority of companies that have recurring billing offering some type of “paperless” billing.
  • Postal mail has been declining in recent years
  • Parcel mail, however, has been slowly creeping up, but it is bulky and heavy, requiring a much larger footprint than postal mail, and reduces the “revenue per square inch” of postal trucks and facilities
  • Overfunded pensions (105% overfunded), and the USPS Office of Personnel Management isn’t allowed to send money back (that would take an act of congress)

Buy more shipping stocks

Using USPS for “last mile” and local delivery has been a tried and true strategy for Amazon so far, hence why it has come into the cross-hairs of the White House. If you see an increase in USPS rates, you could see impacts to the obvious Stamps.com, but look at companies relying on cheap shipping. Etsy ($ETSY), eBay ($EBAY), Shopify ($SHOP), and PayPal ($PYPL) all have independent sellers who rely on cheap shipping to help move goods, and a reduction in goods purchased will have an impact on bottom lines.

Playing Stamps.com and shipping services directly

Right now, Stamps.com ($STMP) is a cash machine, and utilizing a 5 YR Discounted Cash Flow model, we show a 56% upside to the current share price of $261.45 (as of EoD 8/3/18), to a price target of $408.05. A blend of models we use puts it at a fair value of $317.16 a share, or just above a 21% increase.

Buying 17 JAN 2020 $320 CALL and the stock hitting $320 by 16th of June 2019 (almost a year from now) you would see a 26.8% return on your money, and an $825 profit off of one contract. Being extra bullish on $STMP and it hitting $378 by the 2nd of October 2019 would net you $1,377, or a nice and healthy 89.7% return on your money.

Now, the opposite side, if you think that shipping volume will be hampered by the task force recommendation from increased USPS prices, you can short the stock. Looking at a revenue multiple valuation, the stock has an approximate 15% downside, and a target price of $222.28 a share.

January 2, 2021 Update: We have just announced our BEST STOCK NEWSLETTER of 2020 AWARD!

CLICK HERE to find out which stock newsletter was up 78% in 2020 (and whose 2019 picks are now up 113%).

*** Our Award for BEST STOCK NEWSLETTER of 2020 ALERT ***

Updated January 2, 2021

At WallStreetSurvivor, we subscribe to dozens stock recommendation and advisory newsletters. There is ONE newsletter that is constantly outperforming all of the others--The Motley Fool Stock Advisor.

Five of their 2020 stock picks have doubled and the average return of all 24 of their stock picks for 2020 is up 78%!

We have been tracking ALL of the Motley Fool stock picks since January 2016. That's 5 years and 120 stock picks. As of Friday, January 1, 2021 the Motley Fool's January stock pick (TSLA) is up 720%, their March pick (ZM) is up 172%, their April pick of SHOP is up 226% and their June pick CRWD is up 120%; and another two have more than doubled. In addition, 10 of their 2019, 12 of their 2018, 11 of their 2017, 15 of their 2016. Most impressively, over the last 5 years that we have been tracking every recommendation, their average stock pick is up 209%--tht means over the last 5 years their stock picks, on average, have TRIPLED!

Now no one can guarantee that their next picks will be as strong, but our 5 years of experience has been super-profitable. The important thing about the Fool stock picks is you have to buy them the day they are recommended because they usually pop 5-10% in the first 72 hours after the release their recommendation. You sure don’t want to risk missing out on their next pick.

Normally the Fool service is priced at $199 per year but they are currently offering a NEW SUBSCRIBER DISCOUNT that allows you to get theiir next 24 stock picks for just $99/year. HERE is the LINK to visit their New Subscriber Discount page.

CLICK HERE to get access to all The Motley Fool’s Stock Picks and their next 12 months of picks for just $99 per Year! 



GET UP TO $1,000 IN FREE STOCK

WHEN YOU OPEN A ROBINHOOD BROKERAGE ACCOUNT

Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering up to $1,000 in free stock when you open a new account.

Here’s the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $500. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $500. Click here to learn more about this Special Robinhood offer.

Claim your free stock NOW (before it’s too late)



Comments are closed.