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  • Aerospace: The Only Way Left To Play Global Growth 0 comments
    Mar 15, 2013 1:33 PM

    By George Leong, B.Comm. for Profit Confidential

    The Boeing Company's (NYSE/BA) "787 Dreamliner" remains grounded, but the aerospace sector continues to deliver some excellent results and growth. In spite of its problems with the monstrous Dreamliner, Boeing managed to trade above $80.00 for the first time in nearly five years. News that Boeing had won a massive $18.0-billion deal from Ireland-based Ryanair Holdings plc (NASDAQ/RYAAY) is adding to the recent winnings of key contracts for Boeing.

    Driving the buying over the next several decades will be steadily rising demand out of China and other global markets. Boeing estimates China will require 5,000 aircrafts valued at around $600 billion over the next 20 years. And that estimate may be conservative, especially if China continues to grow its income levels at a much faster pace. Boeing is looking at the new 787 Dreamliner as its big play on wide-bodied jet travel in spite of its current issues.

    Chief rival Embraer S.A. (NYSE/ERJ) estimates the global demand will be around 28,000 new planes over the next two decades. There will be over 32,550 plans in the skies by 2031, up from the current 15,500, according to Embraer. The Asia-Pacific region will account for 35% of all plane purchases. The major airlines will operate in the U.S., China, Intra Western Europe, and India, according to Embraer. China will be the world's largest domestic plane market in 20 years. The findings are not a surprise and will be driven by higher disposable income in the emerging global markets along with the desire for travel. My feeling is that strong wealth generation in the world's largest emerging markets, including China and India, will help to drive the demand for commercial planes and defense and stocks in the equities market. (Read about my favorite markets in "Boost Your Portfolio Returns with the Emerging Markets.")

    For investors, I view aerospace as a buying opportunity in th… Read More

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