Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on


Sometimes it takes only a single product to launch a company to the next level -- one insanely great idea, to paraphrase Steve Jobs, to spark customers' and investors' imaginations, and to ignite a multiyear rally in shares.



(AAPL) - Get Report

, it was the iPod/iTunes combo. For

Chipotle Mexican Grill

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, an all-natural burrito. For


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, those amazing plastic shoes.



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, it is a product about 100,000 times larger: the Dreamliner 787 commercial jetliner. And yet there is also a jumbo-jet-sized difference between the first three rally-sparking ideas and Boeing's.

Apple, Chipotle and Crocs all reaped the benefit of their innovations


they had been released and enjoyed by the public. In contrast, Boeing shares have risen fourfold in the past four years even though it hasn't built a single complete, commercial 787 at the target weight for a customer yet, much less delivered one.

Mind-Blowing Complexity

I know it sounds crazy, but what do you expect from Wall Street? Always counting chickens before they hatch. And so now the burning question on the minds of investors is simple: Will the Dreamliner emerge from the most complex manufacturing assembly line in history to make its three critical dates with history -- a factory rollout on numerically auspicious 7/8/07, a maiden flight in late August and first delivery in May 2008 -- without a hitch, or will Boeing be forced to delay at some point because of supply-chain or engineering stumbles?

If the schedule slips -- as some veteran observers still expect because of the mind-blowing complexity of the project -- you are going to see this stock come in for one heck of a hard landing. And don't think it can't happen.

There's plenty of big money betting right now on both sides of the line, with a longtime industry analyst from Citigroup warning investors to sell their shares now before a 25% collapse, while analysts at Bank of America and elsewhere are telling investors to load up now before the next leg higher.

It might be useful to think of the next three months as the aerospace equivalent of that nail-biting period just before an approval decision from the Food and Drug Administration on a new biotech therapy. So buckle your seat belts and prepare for a high-volatility event, because Boeing shares are on track to react with a big move this summer, one way or the other.

Best of the Best

My bet? About a year ago, I came down on the side of the doubters, but in December I came around to believe that the company will hit its marks and crush the bears. In fact, I'll go further now and call Boeing the greatest U.S. manufacturer of all time, considering that it has beaten back all domestic and foreign rivals to become the rarest of entities: a monopoly that has evaded the government's usual trust-busting impulse and pushed the envelope on both innovation and profitability. Look for shares to double again over the next 40 months.

Best ever? Why not. The Dreamliner, if it works as planned, is an unbelievably audacious gamble that planes can be built out of lightweight composite materials instead of heavy metal, that they can use two different manufacturers' engines interchangeably, that they can sport the largest windows ever inserted in planes, that they can be built in pieces at plants from Italy to Japan and then assembled in a single Washington state hangar, that they can fly more quietly and farther on less fuel than ever before -- and that they can be churned out at the unprecedented rate of one every three days.

The 787 is already the most successful new plane in aviation history, with $80 billion in orders on the books, so at the very least you've got to tip your cap to a sales staff that could vend a $175 million item to customers before they could touch or test it.

The only four manufacturers that can compete with Boeing for the crown of best U.S. industrial manufacturer ever are

General Electric

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United Technologies



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, and yet none of them has so thoroughly dominated in such a difficult global business by taking such big risks.

In expectation that Boeing will leverage its epic success forward, the value that investors will put on its shares is going to surprise a lot of people. It's now selling for around $95, and I think you'll see shares fly up to the $135 area over the next 18 months as it coasts toward 2008 earnings above the high end of analysts' current range, around $6.80.

After that -- amid optimism for new versions of the fuel-efficient 787, a revamp of the 737 line to meet the growing worldwide need for aging airliner replacements and an aggressive move into low-cost Chinese manufacturing -- expect shares to head toward $200 by 2011 on earnings of at least $10 a share.

Beyond Dreams

Of course, Boeing has a lot more going for it than the Dreamliner. Chief Executive Jim McNerney has kept a ton of pressure on subordinates to boost profit margins by reducing overhead costs, and it looks as if the company is on track for 8% in annual savings cuts through 2012. And the long-term outlook for more military aerospace spending is still strong despite some real worries over near-term cuts from new Democratic leaders in Congress.

Moreover, Boeing's shares, like those of its peers, are simply cheaper right now than they have been when approaching previous earnings peaks in the past decade. I figure they're trading at around 14 to 17 times 2008 earnings despite annual earnings growth of 20%-plus. In the past, the earnings multiple has peaked out in the low to mid-20s.

The aircraft replacement cycle is likely to last longer than equivalent cycles of the 1980s and 1990s because of the huge increase in the number of customers in emerging countries and aircraft leasing firms worldwide. Environmental and noise regulations at airports over the next few years will also simply force many airlines to ditch older planes before their useful life is complete.

Because credit is more widely available today at lower rates than in past cycles, airline carriers are more capable of issuing debt to cover purchases. And older, or "legacy," carriers have simply not ordered as rapidly in this cycle as in the past so far, with those firms putting in bids to replace only about 7% of their fleets vs. around 10% at this point in the 1990s, according to analysts. They will catch up.

Plus, there's that whole monopoly issue. In past cycles, Boeing has had to compete hard against the European joint venture that produces the Airbus. That outfit has fallen on hard times due to serious engineering and marketing slip-ups, allowing Boeing to move out to a big lead that executives will be loath to relinquish.

Strong competition will next come from Brazil and China, but probably only at the margins with lower-value aircraft as Boeing takes advantage of its massive investment in research and development to keep its designs fresh, attractive and efficient.

If you appreciate Boeing's work but would rather try to play the aircraft cycle with smaller companies that supply it with parts, materials, aftermarket accessories, flight-training modules and leasing services, then check out


( GR),

Rockwell Collins



Precision Castparts



BE Aerospace



Esterline Technologies



Allegheny Technologies

(ATI) - Get Report



(AYR) - Get Report


Genesis Leasing

( GLS).

All are attractively valued right now vs. their growth prospects and have the opportunity to advance as much as 50% over the next 24 months.

At the time of publication, Jon Markman owned shares of Boeing and Aircastle, although positions may change at any time.

Jon D. Markman is editor of the independent investment newsletter The Daily Advantage. While Markman cannot provide personalized investment advice or recommendations, he appreciates your feedback;

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