Questor share tip: UK Mail shares soar on parcel delivery boom The parcels operations reported average daily volumes of parcels increasing by 25pc during the first half ended September, compared with the same period last year. The growth in volumes largely came from home deliveries of items ordered online. Parcels contribute 40pc of the group revenue and more than half of group profits. The mail company said it expects the rapid growth in the parcels business to ease into the second half against tough comparatives. The business is undoubtedly in structural decline, but UK Mail bucked the trend, enjoying mail volumes some 2pc ahead of the same period last year. Overall, the delivery group reported underlying revenue some 4pc ahead of the equivalent period last year. Shares in UK Mail have now more than doubled from around 250p less than a year ago. However, it remains a solid investment. The forecast dividend yield on the shares is 3.6pc and that dividend is expected to increase around 7pc for the next three years. The dividend is covered 1.5 times by earnings and free cash flow. The balance sheet is also strong, with around £18.8m in net cash expected at the year end. This is impressive considering the group is investing £20m in a new automated sorting system to increase efficiency. That means the investment is expected to take place over the next two years is largely being funded by the company's own cash, The first profit improvement should come in the year ended March 2015. UK Mail is a good company, but it looks like much of the good news is in the price as shares trade on a PE ratio of 18.3 times forecast 2014 earnings, so a hold for now.