To The Moon

$Union Pacific(UNP)$ $United Parcel Service Inc(UPS)$ $Intuitive Surgical(ISRG)$

Every investor loves finding high-quality companies trading near their 52-week lows. It’s a strategy that, if done correctly, can uncover bargains that the broader market has temporarily mispriced. But as every experienced investor knows, not every stock near its low is a buy. Sometimes, they’re value traps—companies that look statistically cheap but are stuck in structural decline.

Each Saturday, I run a screen across U.S. equities to find stocks trading within 10% of their 52-week lows. From there, I filter out low-quality names and focus only on established companies with durable competitive advantages, solid balance sheets, and strong free cash flow. I then ask the key question: is this a genuine buying opportunity, or is the stock cheap for a reason?

This week, three companies stood out: UPS (United Parcel Service), Union Pacific (UNP), and Intuitive Surgical (ISRG). All are household names, but each has very different prospects. In this article, I’ll walk through my analysis, valuation view, and verdict on whether these stocks are worth owning at current levels.

Stock #1: UPS – Is the Dividend Yield a Trap?

United Parcel Service has been one of the most heavily discussed names on X (formerly Twitter) in recent weeks. The stock is down about 45% over the past five years, wiping out much of its previous bull run. Insider buying has attracted attention: CEO Carol Tomé purchased around $1 million in shares, while another director invested over $430,000 at current levels. When insiders put that much personal capital on the line, it usually signals confidence in the company’s future.

Yet, despite these insider moves, I remain skeptical.

A Decade of Market Share Decline

UPS’s core issue is simple: competition from Amazon. In 2014, UPS controlled about 40% of the U.S. parcel delivery market. Today, that figure has collapsed to 21%. Amazon Logistics, once a non-factor, has surged to 27% share and is expected to overtake USPS by 2028. Amazon is growing package volumes at a 7% annual rate, while UPS struggles to manage 1.7%.

This is not just cyclical weakness—it’s structural decline. UPS’s moat has been eroded, and the industry dynamics no longer favor it.

The Amazon Volume Dilemma

In a surprising move, UPS recently announced it would cut Amazon-related volumes by 50%. Currently, Amazon makes up about 11% of UPS’s revenue. While this may help protect margins—since Amazon tends to pressure pricing—it also accelerates market share loss. Management is betting that higher revenue per package (up 6% projected for 2026) will offset falling volumes (expected down 8.5%). That’s a tough sell.

Replacing Amazon overnight is virtually impossible. Even if UPS wins new business, the structural headwind remains.

Dividend Looks Tempting, But Beware

On the surface, UPS looks like a classic income play:

• Dividend yield: 7%

• Free cash flow yield: 9% (historically near bottom levels)

• Dividend coverage: strong, with payout well below free cash flow

But here’s the trap: when revenues decline, free cash flow eventually follows. That 9% FCF yield can quickly compress if volumes continue to drop. In my experience, when a stock offers both a high dividend yield and high free cash flow yield but no revenue growth, it often turns into a classic dividend trap.

Valuation Check

• EV/FCF: 14x – too expensive for a no-growth company.

• What would make it attractive? Either a 15% FCF yield (vs. 9% today) or ~10x EV/FCF.

Until then, I see far better opportunities in beaten-down REITs and other high-yield sectors where dividends are better supported by secular demand.

Verdict on UPS: The dividend is safe for now, but this is a structurally declining business. Looks cheap, but in reality, it’s a trap.

Stock #2: Union Pacific – Quality Railroad, Clouded by Merger Risk

Union Pacific has long been one of America’s strongest rail operators. I personally owned the stock until 2021, when I exited around $220. Today, at $225, the stock has essentially gone nowhere in four years. Yet, beneath the surface, this is still a highly profitable company with durable competitive advantages.

The Core Business is Thriving

UNP owns 26% of Ferromex, Mexico’s largest railroad, giving it valuable exposure to North American trade flows. Financially, it’s been strong:

• EPS growth: +15%

• Net income growth: +12%

• Revenue growth: +8–10%

• Margins: among the highest in the industry

Historically, UNP has traded around 20–22x forward earnings. Today, it’s at about 18x—a valuation near its historical bottom. On the surface, this looks like a great entry point.

The Norfolk Southern Problem

But the real elephant in the room is UNP’s proposed acquisition of Norfolk Southern (NSC). The deal, if approved, would create a near-duopoly in U.S. rail. That’s why I doubt regulators will sign off. Even if they do, the financials don’t look great.

• Acquisition price (including debt): $85 billion

• UNP current EV: $166 billion

• Pro forma EV: $251 billion

• Projected FCF by 2030: $12 billion

That implies paying 25x 2030 cash flow—hardly attractive. And until 2027, UNP has paused buybacks, removing one of its historical shareholder return levers.

The Better Entry Point

Without the merger, UNP is a clear buy. With the merger, it’s overvalued. My target entry is $180, where the risk/reward improves and you’re paying closer to 18–19x 2030 free cash flow on a pro forma basis.

Verdict on UNP: High-quality company, but merger overhang makes it risky. Worth buying around $180 or if the Norfolk Southern deal falls through.

Stock #3: Intuitive Surgical – An Amazing Business at the Wrong Price

Few companies in the medical device space have the moat of Intuitive Surgical. Best known for its Da Vinci robotic surgical systems, Intuitive has built a subscription-like model: install the robot once, then earn recurring revenue from service contracts, upgrades, and consumables.

• Revenue growth: 17% annually

• Recurring revenue: 84% of total

• Business model: sticky, high-margin, subscription-like

This is the kind of business Wall Street loves—predictable cash flows, high switching costs, and long-term adoption trends.

The Competitive Threat

But growth has been stalling. Why? China.

New Chinese-made surgical robots, like the Edge MP1000, cost about $1.6 million—versus $4.6 million for Da Vinci. Many surgeons say the quality is comparable, especially outside the U.S. That’s a huge pricing advantage and one that threatens ISRG’s international expansion story.

Valuation Check

• Current P/E: 55x – far too high for slowing growth.

• Reasonable multiple: 35–40x forward earnings.

• Target fair value: ~$370–$400 (vs. ~$930 EPS × 40).

Until the stock re-rates lower, the risk-reward just isn’t attractive.

Verdict on ISRG: Excellent company with a sticky business model, but significantly overvalued. A buy closer to $370.

Final Takeaway – Which Stock is the Best Opportunity?

All three of these companies are near their 52-week lows, but not all lows are created equal.

• UPS looks cheap but is in structural decline. The dividend is safe near term, but long-term fundamentals are eroding. Classic value trap.

• Union Pacific is fundamentally strong but clouded by the Norfolk Southern deal. Without the merger, it’s attractive around $225. With the merger, I’d wait for ~$180.

• Intuitive Surgical is a fantastic business but trading at an unjustifiable premium. The fair entry is closer to $370–$400, not today’s levels.

If I had to pick one, it would be Union Pacific, provided I could wait for either regulatory clarity on the merger or a pullback closer to $180. UPS is best avoided, and ISRG goes back on the watchlist for now.

Key Lesson for Investors: Just because a stock is near its 52-week low doesn’t mean it’s a bargain. Valuation, industry dynamics, and structural trends matter far more than where the stock is relative to its past price.