I suppose I could lead off today's column with yet another "package delivery" pun ... but I'll spare you. Instead, let's put the puns on a shelf for a change, and just dive right in and see how United Parcel Service (NYSE:UPS) performed last year.

I recently argued that UPS will turn out to be the best performing stock in 2010. More than 1,700 of you cast votes agreeing with me, making (in the first round of voting, at least) UPS the most popular pick out of a field of 13 lucky contenders. (Apple (NASDAQ:AAPL) eventually took the prize, narrowly beating out Silver Wheaton (NYSE:SLW).)

Still, I'm betting that 1,700 Fools can't be wrong.

Betting on the margin
Central to my "buy thesis" for UPS was a reversal in fortunes for the company's profit margin. UPS clocked in at just a 3.6% net margin going into the contest, but has historically boasted closer to a 7.6% net. I argued that as the U.S. economy revives, and UPS begins delivering more packages over the same coverage area, its revenues will surge while costs remain more or less flat -- sending profit margins through the roof.

So how'd that work out?
Pretty well, actually. Like archrival FedEx (NYSE:FDX) before it, UPS trounced analyst estimates handily in the fourth quarter of 2009. Average parcels shipped held steady at 17.3 million packages per day, and revenues actually declined slightly. Yet by cutting costs, UPS was able to triple its Q4 net margin, to 6.1%. Trailing-12-month margins are already turning upward, and sit at 4.8% as we speak.

Free cash flow, too, is making a comeback. UPS churned out a healthy $4.1 billion for full-year 2009, giving the stock a free cash flow multiple of 14. So when CEO Scott Davis tells us that "UPS has emerged from the worst recession in decades leaner, more focused and better positioned to take advantage of increased global trade," well, there's something to that.

Foolish takeaway
UPS bulls will tell you that the reasons to own this company are its record in innovation; its leveraging of supply-chain expertise through its logistics business; and its flanking attack on FedEx and Staples (NASDAQ:SPLS) with the new online printing venture. And, of course, there's its use of "mobile shipping" as described in its ballyhooed references to the iPod, iPhone, and Research In Motion's (NASDAQ:RIMM) BlackBerry in this week's release.

As for me, I'm just impressed with UPS's handling of the basics: Keeping costs down. Leveraging revenue growth over fixed costs. Getting the margins moving back up. Block and tackle, UPS. Block and tackle.

Fool contributor Rich Smith has no position in any stocks named above, but Apple, FedEx, and Staples are Motley Fool Stock Advisor recommendations, and United Parcel Service is a Motley Fool Income Investor pick. The Motley Fool has a disclosure policy.