Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Dow Stock Market Dow Trend Forecast Current State - 22nd Apr 21
Gold Rebounds Amid Positive Economic Reports - 22nd Apr 21
China's record first quarter fuels strong expansion in 2021 - 22nd Apr 21
Gold Price Next Key Level - 22nd Apr 21
Here's What to Look For When Hiring a Real Estate Agent - 22nd Apr 21
Ethereum EIP 1559 and Raven Coin - 21st Apr 21
Gold, USDX: The Board is Set, the Pieces are Moving - 21st Apr 21
World Economies Need to Find a Lot More COPPER! - 21st Apr 21
DogeCoin CRASH! Time to Start Mining BOODGIE Coin! Crypto Mania 2021 - 21st Apr 21
Pausing Stocks and Gold Fireworks - 21st Apr 21
Precious Metals and Miners Start of New Longer-Term Bullish Trend - P2 - 21st Apr 21
Looking For A Mortgage Broker? Here Is How To Hire One - 21st Apr 21
Amazon AMZN Stock PRIMEDAY SALE! Trend Analysis - 20th Apr 21
Stock Market Sentiment Speaks: You May Not Believe My 2021 Targets - 20th Apr 21
Stock Market Phase Two Projection - 20th Apr 21
Are Precious Metals & Miners Starting A New Longer-Term Bullish Trend? - 20th Apr 21
Inflation: First the Gain, Then the Pain… - 20th Apr 21
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Don't Be Fooled by the Media, Boeing Stock is a Buy

Companies / Investing 2013 Jul 29, 2013 - 01:46 PM GMT

By: Money_Morning

Companies

William Patalon writes: I was at work here at the office last Monday night when I heard about the Boeing 737 crash at New York's LaGuardia Airport. A nose wheel on the jetliner had apparently given way after a hard touchdown just after 5:30 p.m. (EDT), leading to a crash that injured about eight of the 150 folks on board

"Uh-oh," I thought to myself. "Here comes another feeding frenzy."

You're an exceptionally sharp group of folks, so you know what I'm getting at here.


In the last couple of weeks, we've had a fire in one of Boeing's new 787 Dreamliners while it was parked at a gate at Britain's Heathrow Airport. Then there was the early July crash of Asiana Flight 214, which involved a Boeing 777 aircraft.

This nose wheel debacle would seem to have created a "trifecta of tragedy" involving the maker of all three of these jetliners. And that's led to a real effort by some journalists in the mainstream media to weave this into a tapestry that underscores the "continuing woes" of The Boeing Co. (NYSE: BA).

Don't be fooled.

There's that old cautionary aphorism that warns how "appearances can be deceiving." In this case, I believe they are.

I don't want that deception to juke you out of an intriguing long-term investment opportunity. If anything, you should be looking for an opportunity to buy.

Trust me on this ... with Boeing, I know what I'm saying.

I recommended the airliner giant in late September 2011.

The stock did well - very well, in fact.

Then came the Dreamliner battery crisis in the first part of January.

I saw it as a buying opportunity.
Private Briefing

Interestingly, I received a surprising amount of blowback on my call to buy into the weakness. Some said I was underestimating the severity of this problem, while others said I was making light of a safety issue (something this former journalist would never do ... trust me on that).

The bottom line, however, is that Boeing is up 72% since that initial recommendation (77% including dividends) and 43% since the Dreamliner crisis "buying opportunity" call and was trading on Friday in the neighborhood of $105.

And just last week the world's largest airplane maker reported second-quarter results that beat estimates - and followed up by boosting its full-year earnings forecast.

Boeing said it earned $1.67 a share (excluding pension expenses) in the second quarter - well above the $1.58 analysts had been looking for. The company had been forecasting full-year earnings of $6.10 to $6.30. But it increased that full-year projection from $6.20 to $6.40 thanks to faster-than-expected aircraft deliveries and lower 787 Dreamliner production costs.

And Wall Street is catching on - last week, a major Wall Street firm said Boeing is worth $125 a share.

Last Wednesday, citing a positive view of the defense/aerospace sector, Deutsche Bank AG (NYSE ADR: DB) analysts maintained a "Buy" rating on Boeing and boosted its target price to $125 a share.

"We like Boeing into the quarter on the back of better-than-expected second-quarter deliveries and [the] likelihood of a small uptick to guidance and continued progress on 787 production costs," said Deutsche Bank analyst Myles Walton.

As the earnings report show, Boeing is getting stronger - not weaker. And we're not just talking about the numbers themselves - but rather are looking at the inherent business improvements that Boeing is making to bring about those bottom-line gains.

Those improvements include:

  • Gains from an accelerated assembly rate for the 737, 777 and 787 - all thanks to a boom in global aviation (a topic we'll come back to).
  • Greater deliveries of higher-margin aircraft - such as the 737 and 777. In fact, the 169 airplanes delivered during the quarter marked Boeing's highest output level in nearly 15 years.
  • Cost reductions on the 787 Dreamliner program.
  • And some key international sales in the defense business - which have helped offset cost cuts in domestic defense programs brought about by sequestration and other budget reductions.

With a big company like Boeing, earnings aren't the only metric of success - you also have to look at revenue ... the so-called "top line." You see, big companies can elevate earnings with cost cutting - but only for a time. Eventually, you also have to have revenue growth.

Revenue, you see, is the "raw material" of profits. So when you see a company that's increasing revenue - and is then bringing that revenue to the bottom line in the form of higher earnings - you usually have yourself a pretty healthy company.

And that's what Boeing is doing.

Revenue rose 9% to reach $21.8 billion. And that was a full $1 billion more than analysts were expecting.

There are still concerns, of course.

In the conference call with analysts, Boeing CEO Jim McNerney said that sequestration remains a big concern - acknowledging that the company hasn't seen the worst impact of the federal cutbacks. In fact, the Boeing exec punctuated that point by saying that "we are not out of the woods at all. We are entering the woods."

Some might find such comments alarming. I find them encouraging.

McNerney also noted that Boeing is taking whatever steps are possible to get ready for sequestration's impact, and is being more than realistic about the potential effect. In fact, the scenarios that it's considering include the "most draconian" possible.

You have to like a corporate leader who believes in being prepared to that degree.

Especially when there's lots to be bullish about.

McNerney also noted that:

  • Global customer demand remains strong for Boeing's fuel-efficient and value-creating commercial airplanes.
  • Order activity remains vigorous: During the second quarter, Boeing booked 481 net orders - which increased the company's record commercial airplane backlog to nearly 4,800 airplanes worth $339 billion.
  • Deferral requests remain well below historical norms.
  • Requests for accelerated deliveries remain healthy.
  • Demand is fairly well-balanced from a geographical standpoint - hinting at a generally healthy airplane market.
  • There's backlog, too, between airplanes that will be used to support traffic growth and those that are needed to replace aging fleet aircraft.
  • Passenger trends are not only healthy - they've actually grown in recent months.

Boeing is a long-term holding because of the sheer size of the global commercial airplane market.

In an update report back in June, I said how the Chicago-based aerospace giant upgraded its 20-year global forecast for commercial airplane demand. Although this forecast is created by an industry participant (Boeing), this annual projection is nonetheless closely watched and is valued as an accurate assessment of the long-term health of the worldwide jetliner market. Boeing has been issuing that yearly projection for a long time, and it's viewed with considerable credibility.

In that mid-June report, Boeing said airlines, freight-carriers and airplane leasers will need 35,280 new jets worth $4.8 trillion as the world's fleet doubles over the next two decades. That forecast represents a 3.8% increase over the company's forecast from a year ago.

That may not seem like a big increase. But that much of a change in just one year - in a market as mature as this one - is significant.

Even more remarkable is the fact that the overall forecast increased that much - even with downward revisions in North America and Europe, where the continued overhang of the global credit crisis is threatening to create a "no-growth" recovery, or even a double-dip downturn.

It was this long-term growth potential that I had in mind when I told readers to "buy Boeing" during the battery crisis. And it's what I thought of again on Monday when I saw that many media outlets were trying to weave a "more bad news for Boeing" saga after the nose wheel mishap up in New York.

Unlike the battery crisis in January, the latest three mishaps are unrelated events that took place in three different types of aircraft. It's just not the same thing.

I like Boeing long term. And barring some unexpected new event, or a fundamental change in its business, that hasn't changed.

Source :http://moneymorning.com/2013/07/29/dont-be-fooled-by-the-media-boeing-is-a-buy/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules