For those that bought Boeing when I recommended it back on Aug 27th, you are up a cool 12%. However, there is more money ahead. Boeing (NYSE:BA) is going to come out with earnings on Oct 25th. I expect these earnings and even more importantly, the forward guidance to be extremely strong. With Airbus hitting some serious roadblocks, Boeing is clearly the market leader in the commercial airline space and has the opportunity of a lifetime.
It is not so much as what Boeing has done than it is as what Boeing has not done. For starters, Boeing does not have factories in 4 different countries like Airbus. This means they don't have the governments of 4 countries with historical differences to contend with.
Boeing has not yet delayed the launch of its key aircraft like the 787 Dreamliner, nor has it missed its delivery dates on the 747s. So far this year, Boeing has received orders for over 700 aircraft, whereas Airbus has received just over 200. This is due to serious delays in Airbus's $16 billion project called A380. They delays have been attributed to software incompatibilities between two locations working on the A380, and will ultimately cost Airbus $6 billion over the next 4 years.
Earlier this month, Airbus announced yet a third delay in the production of these aircrafts, pushing delivery date of A380 for its customers like UPS to May 2010 instead of the previous delayed date of September 2009. Such delays are causing commercial air carriers to review their Airbus orders and perhaps even switch to Boeing.
Currently, Boeing is sitting on 402 orders for the 787 Dreamliner. With Continental (NYSE:CAL), American (AMR) and United (UAUA) all pulling off successful turnarounds this year, and jet fuel prices declining, I expect them to start upgrading their fleets soon. Additionally, British Airways just announced last week that they plan to upgrade their currently all Boeing fleet - a contract that would be worth $10 billion to the winner. With Airbus's prolonged woes, I believe that the British heavy weight will go with Boeing.
Boeing's stock hit an all time high of around $89 back in May. While the market has since recovered to new heights, Boeing is 10% lower than its May highs, despite having recovered 10% from its September levels. $72 represents a solid level of support for this stock and a good earnings and the BA contract would easily put this stock at $100.
For an all American company, Boeing makes for a strong, yet defensive investment in an uncertain market. I would buy at these levels and going into earnings next week.
BA 1-yr chart:
Disclosure: I own Boeing for my portfolios