If shares of Boeing do go into a nosedive over production delays, as I believe they will, bitter holders will shake their heads over the nosebleed altitude to which valuation has ascended this year. On a trailing basis, over the past 10 years Boeing's price-to-sales multiple has run from 0.69 to 1.1. It's now well above the top end of the scale. Boeing's price-to-book multiple has run from 3.5 to 5 over the past 10 years. It's now almost 6.Investors pay a premium for an industrial company's shares when they believe it is halfway through a business up cycle and recent earnings growth will extend at least three years into the future. They pay absolute top dollar when they think a company whose growth has been cyclical in the past has found a way to smooth out its ups and downs and bring in steadier cash flows through diversification efforts.
Boeing Bet Rides on 787
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
More than 30 investing pros with skin in the game give you actionable insight and investment ideas.