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Profit From Boeing's Turbulence

NEW YORK ( TheStreet) -- I received many questions about Boeing (BA - Get Report) in the last couple of days. The common question is if Boeing is a value buy due to headline price pressure.

Boeing may become a value buy, but the shares are only down about 10%. it's not there yet. Boeing may be a good stock to own but it hasn't reached value status as a result of the battery problems yet.

If the Dreamliner issues are fixed fast, and I mean really fast, investors can expect a slow and steady recovery. Keep in mind that stocks tend to drop much faster than they move higher. We do have an idea of what can happen.

As you may recall, during the summer of 2010, the Gulf of Mexico had a major oil spill that put into question the future of several companies. BP (BP - Get Report), TransOcean (RIG - Get Report), and Haliburton (HAL - Get Report) share prices were hit hard and the problems dragged on for months.

Boeing has everyone and their regulatory brother putting a microscope on the Dreamliner aircraft. Boeing has the potential to have a constant stream of new issues that it will need to fix for the next two or three months. In the meantime, Boeing shares will continue losing altitude as long as problems stay in the news.

The fear isn't that the planes have a potential battery fire problem -- that is fixable and will get worked out. The real fear is that other issues will be found during the examination, and this will drag on. Enough negative news and Boeing may suffer a shift in market sentiment.

Apple (AAPL - Get Report) recently suffered from a shift in market sentiment that resulted in a 30% drop in share price. Valuations and fundamentals were thrown out the window, and people sold because of fear the shares would continue falling lower.

It turns into a self-fulfilling feedback loop, and it can get ugly. Look at the negative feedback loop BP endured.

I traded BP during the entire Gulf mess, and I crunched the numbers to account for every possible scenario. Because of corporate entities, BP wasn't facing a complete liquidation and yet it was reported in the media that it may go out of business. After two years, BP shares have not fully recovered.

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RIG $15.33 0.00%
AAPL $124.24 0.00%
BP $39.81 0.00%
BA $148.17 0.00%
HAL $43.18 0.00%


DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

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