What I'm about to do is play devil's advocate.
Too many investors get excited and jump into a stock without comparing and contrasting it against other possibilities.
So before buying shares in shipping giant FedEx
YRC Worldwide is an LTL (less-than-truckload) carrier. You've likely seen its Yellow and Roadway trucks on the highway. In the LTL space, it competes directly with FedEx and UPS.
YRC is a Fortune 500 company trading for less than $1 a share; it's a huge company by sales selling for a low stock price. In fact, it's got a price-to-sales ratio of just 0.08.
There's a reason for this? There is real bankruptcy risk as the company struggles with profitability in a tenuous economy. But if -- a big "if" -- it survives, it could be a multi-bagger.
Kinder Morgan Energy Partners
While FedEx and UPS ship packages, Kinder Morgan and Enterprise Products run pipelines that transport petroleum products. While they're certainly affected by fluctuating commodities prices, remember that these two are akin to toll-booth operators getting their vig as the product passes through to its destination.
Both Kinder Morgan and Enterprise Products are master limited partnerships (MLPs), which pay out most of their earnings as dividends to get favorable tax treatments. Hence, they're both yielding more than 6% (UPS is near 3% and FedEx is less than 1%).
Looking at another capital-intensive transportation-related business, let's discuss Ford. I've written in the past about Ford's amazing turnaround at the hands of Alan Mulally. Not only does it have positive earnings, its trailing P/E ratio is below 10. It still has a massive debt load, but its latest earnings report is pretty impressive.
Contrast Ford's bottom-line results with the results of freshly IPO'd electric carmaker Tesla
The final reminder
As you decide among FedEx and these other alternatives (or none of the above), remember that one compelling reason does not an investment thesis make. I present these options to encourage you to compare and contrast as you do your research. Good luck!
If you enjoyed this article, check out 5 stocks you should consider before buying a certain iPhone maker.