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The Boeing Company (NYSE: BA): Ready for Takeoff
Plus, at the end of the
day, quality always wins out. A pilot friend of mine who is a Captain with
United Airlines said that flying an airbus is the equivalent of driving a
"thirty year old AMC Gremlin" and that flying a Boeing is a combination of
driving a new "Ford 550 truck and a BMW" all wrapped into one
automobile.
Prior to 2006, life wasn't looking so good for
Boeing. Its rival Airbus was coming on strong, a number of scandals
hurt the company’s image and endangered contracts, and the commercial
airline business was demanding fewer planes. But, even without
Mullaly, Boeing will coninue to thrive and I think its stock price
is ready to climb.
For one thing, CEO James McNerney seems
ready to take his talented team forward and avoid the scandals that hurt the
company in prior years. But the primary reason to be optimistic about Boeing is
the renewed demand from the commercial airlines; a lot more planes are going to
be sold in the coming years, and with its superior planes, Boeing stands to
benefit a great deal. To be sure, Airbus will remain a formidable competitor,
but virtually everyone knows that Boeing
is making the better planes these days.
There is also growing demand for planes in emerging markets, and
countries like India and
China will help offset future
cyclical downturns among American commercial airlines. As it enjoys increased
sales, Boeing will also take comfort from its improved margins; the downturn in
the commercial airplane sector forced the company to improve its efficiency in
ways that will help the company down the road.
The commercial airplane division of
Boeing will be especially valuable in coming years as budget constraints start
to affect defense spending. The post-9/11 years have been very good for Boeing’s
defense-industry divisions, and the company has made the most of the
opportunities by winning many contracts. Boeing will continue to do well in this
area, but any major growth is more likely to come from the commercial
sector.
Boeing’s stock has dropped in the last
few months, but revenues grew strongly in
2005 and the first two quarters of 2006 showed steady growth over 2005. I think
this trend is going to continue, and this is a good time to get in.
Type of
stock: The largest aerospace company in America, Boeing is poised for real
growth.
Price
target: Currently at $73, the stock is just about
in the middle of its 52-week range. The company’s second quarter results were
hurt by more than $1 billion in charges stemming from a settlement and a delay
in fulfilling a contract, but with its strong
management, excellent technologies and superior customer
service, the price should rise to
$90 in the next 18 months.
(Photo
Credit:
AP)
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hilaryonstocks at 11:02:00 AM EDT Blog about this entry |
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Thanks, I'm glad to hear you like Boeing. And it looks like Airbus may have even more problems...
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I have just returned from a visit to the Boing plant in Washington The 787 Dream machine is going to be a winner. The new light weight materials being used will surpass Airbus for years to come.
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BA already hit 90 this year, a greater upside should be seen after the fourth quarter earnings are reported and a contuniued climb should occur as the spring orders begin to flow.
10/11/06 2:20 PM