(Investing.com) - E-commerce is booming during the pandemic and so are the companies that deliver shipments to millions of consumers stuck in their homes.
The demand for delivery services has been so strong this holiday season that United Parcel Service (UPS) imposed shipping restrictions on some large retailers like Gap Inc. and Nike last week, the Wall Street Journal reports.
This unexpected shift in consumer purchasing trends has already immensely benefited the parcel delivery rivals FedEx and UPS. Their shares, after fully recovering from the March dip, are up about 96% and 43% this year, respectively.
So, if you’re looking to add one of these players to your portfolio right now, you have to decide between these two competitors and their growth prospects. Let’s take a deeper look.
FedEx: Early Preparations Making The Difference
FedEx’s business restructuring—which was planned before the pandemic—proved to be a great differentiator in this new environment.
Before COVID-19 spread across the globe, the company had already moved to seven-day service, expanded capacity for larger packages, introduced new routing software and began pushing more express packages into the lower-cost ground network.
FedEx One-Year Chart.
With FedEx shares surging more than 30% in the past three months, analysts are getting more bullish. Indeed, 71% of them rating the stock a buy, according to FactSet.
Barclays last week upgraded the stock to overweight from equal weight, citing “an abundance of growth opportunities” tied to the e-commerce expansion.
UPS: Facing Cost Pressures
In many ways, the story of UPS is no different. The company is ideally positioned to benefit from the e-commerce boom and perhaps better aligned with customers due to its strong ground operations.
But if you look at the company’s share performance over the past three months, it’s obvious that investors are favoring FedEx over UPS. The stocks diverged in early September, when FedEx continued its upward trajectory, while UPS under-performed.
UPS One-Year Chart.
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