The Catalyst Is Coming for United Parcel Service. Here's Why Smart Investors Are Buying Before July.

United Parcel Service (NYSE: UPS) is one of the world's largest package delivery services. It provides a vital service that isn't going away anytime soon. However, the company has been overhauling its business, and its financial results have been weak for a couple of years. Management believes that's going to change in the second half of 2026, which is why you might want to buy before the upturn arrives.

What has United Parcel Service been doing?

To improve the company's profitability and growth prospects, UPS has been investing in technology, trimming staff, and selling unnecessary assets. It has also been refocusing on high-margin customers and moving away from lower-margin customers, even if those customers have high volumes. All in, UPS has been working through a period of elevated costs and falling revenues. That's a worrying mix, and the stock has lost half of its value since the start of 2022.

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There are many moving parts, but progress is being made. For example, revenue per piece has been rising in the company's U.S. business despite the segment's declining revenues. That is exactly what you would expect to see based on what management is doing.

UPS' turn higher is on the way

The company's turnaround isn't over just yet, and 2026 revenues are likely to be flat with 2025. However, the industrial company will have worked through a material customer shift, with Amazon (NASDAQ: AMZN) related reductions offset by growth in other areas, such as healthcare. And most of its corporate actions will have been completed, so the costs associated with those moves will be in the past. That sets the stage for better financial performance.

Stepping back and looking at the full year, it will be a tale of two cities storyline. In the first half, revenues and margins will be weak. In the second half, management is calling for revenues to resume growth and margins to begin improving. It is likely that UPS highlights this expectation again when it reports second-quarter earnings, and the results will start to show up with the third-quarter earnings release. Getting ahead of that by adding the stock prior to second-quarter earnings could make a lot of sense.

You will be paid well to wait for UPS' inflection

That said, UPS is offering dividend investors a 6.2% yield. Management has basically stated that it plans to support the dividend in 2026. So even if the turnaround takes a little longer than expected, you'll be rewarded handsomely for sticking around. But, if the plan works as advertised, Wall Street is likely to afford UPS a higher valuation fairly soon. Wait too long, and you could be late to the party.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool has a disclosure policy.