William Johnson, a director at United Parcel Service (UPS), recently bought 5,000 shares. The buy increased his position by over 1,000%, and came to a total cost of $643,025.
This is the second buy from insiders this year, following a 1,400 share buy from another director for just under $200,000 back in February. Going further bank, UPS insiders were more likely to be sellers of shares, largely following the exercise of stock options.
Overall, UPS insiders own less than 0.1% of shares.
The shipping and logistics giant is down 32% over the past year. That’s in-line with the company’s 33% drop in earnings amid higher operating costs. Revenues also decreased by 1% at UPS over the last 12 months.
Even with that decline, shares are reasonably valued at 17 times earnings. Global shipping is an oligopoly market, with just a few major players.
Action to take: Shares have been generally declining over the past year, and recently hit a new 52-week low. While UPS now pays a 5.1% dividend, patient investors may want to hold off on buying a position until shares retest the recent low under $125.
For traders, the October $125 puts, last trading for about $3.80, could see mid-double-digit returns. Markets are seasonally weak in September and October, and the stock’s downtrend points to further gains with a put option trade.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.