Boeing Stock Is Set to Go Sky-High
The key to reaping guaranteed profits over the long haul is pinpointing those companies that have proven they can dominate their markets, no matter what the economic climate may be like.
Boeing (BA) - Get Report is just such a company. Despite its famous name, the Seattle-based airline manufacturing giant remains an undervalued gem.
As I write, President Obama is visiting Vietnam, a trip that would have been unthinkable a few decades ago. Speaking in Hanoi, Obama announced Monday that the United States is lifting a decades-long ban on the sale of military equipment to Vietnam.
The Vietnamese had already placed a big order for Boeing jets. VietJet Aviation just finalized an order for 100 737 MAX 200 airplanes, the largest-ever single commercial airplane purchase in Vietnam aviation. The final removal of all restrictions will only encourage them to place more orders, both commercial and military.
That's the key to Boeing's dominance: It has a big share of the market for civilian airliners, but on top of that it's also a great defense stock.
Boeing has a high dividend and outsized capital appreciation potential. It's a buy-and-hold-forever blue chip that's not getting its due from investors right now because of intensified competition from the European-based Airbus AIR.PA.
But here's the difference: Airbus is a bloated, state-subsidized corporation that, because of its location and market position in Europe, is burdened by all kinds of regulations. Boeing, on the other hand, is a fantastic American stock for your growth portfolio.
Boeing has been synonymous with aircraft for generations. There was a comedy was back in 1964 called Boeing Boeing (about a guy dating three flight attendants at once).
Boeing made the smart decision to keep its production and innovation activities going full throttle even during the economic slowdown of 2008-2010, knowing that eventually things would turn around.
Now orders for aircraft are soaring again -- not just because of the general economic recovery, but also because the sharp drop in the price of jet fuel in 2014-2015 left major air carriers like American and Delta with profits to spare.
As a result, Boeing's revenues rose to an all-time record of more than $22 billion in the first quarter of 2016, up about 2% from an already strong performance in 2015. Operating cash flow of $1.2 billion leaves the management with plenty of resources to fund further innovation, keeping the company ahead of both Airbus and Lockheed Martin.
But while it made its name here in the good old USA, Boeing has been adept at moving into overseas markets as well, even challenging Airbus successfully on its own turf.
International travel is the future of aviation. The most modern, state-of-the-art airport in the world today is not in New York or London -- it's in Dubai. Boeing is cashing in on this market. The firm is set to deliver a record number of airplanes this year to Turkey's flag carrier, Turkish Airlines. The carrier will take delivery of six 777-300ERs and 20 Next-Generation 737-800s in 2016.
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With a price-to-earnings ratio of only 17, Boeing is a rare bargain right now. But this blue chip stock is just one of the guaranteed winners we can provide you. If you'd like to see a list of investments that GUARANTEE a comfortable retirement, just click here!
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.
