Come Fly With Boeing

NEW YORK ( TheStreet) -- I like Boeing ( BA), because it seems to be a balanced defense and aerospace company. It supplies both the military and commercial markets and at the same time serves both the domestic and foreign markets. If things are stable and peaceful, the civilian markets place orders; when things get tense and unstable, the military places orders. The company produces during war and peace.

Recent political uncertainty in the U.S. seems to give the stock price a lot of volatility, as seen in Barchart's hourly trading chart of activity during the past month. Lots of movement but around the same price going into and out of the past month:

The same has held true for the past six months. Although the market as measured by the Value Line Index was slightly down by about 4% for the period, Boeing has remained again about the same price. Lots of movement but almost a net nothing.

Factors to Consider

Barchart technical indicators:
  • 24% Barchart technical buy signal -- positive signals are strengthening
  • Trend Spotter Hold
  • Above its 20-, 50- and 100-day moving averages
  • 5 new highs and up 1.10% in the past month
  • Just 4.51% off its 1-year high
  • Relative Strength Index 73.24%
  • Barchart computes a technical support level at 73.24
  • Recently traded at 74.32 with a 50-day moving average of 72.78

Fundamental factors:
  • 26 Wall Street brokerage firms have assigned 30 analysts to make predictions on the stock
  • Analysts project revenue will grow by 17.40% this year and another 7.80% next year
  • Earnings are estimated to be down by 11.60% this year but increase by 19.10% next year and continue to increase over the next five years by an annual rate of 10.61%
  • The consensus numbers resulted in 12 strong buy, 14 buy, 3 hold and just 1 underperform recommendation for clients
  • The consensus is that investors should see a total annual rate of return between 12% and 16% over the next five years
  • In the last 30 days, 11 of the firms have increased their earnings projections
  • The balance sheet rates an A+
  • The P/E of 14.41 is lower than the market P/E of 15.10
  • The dividend rate of 2.37% is about 30% of projected earnings and almost the same as the market dividend rate of 2.30%
  • TheStreet Ratings staff rates the stock an A-
  • Commercial aircraft production is up
  • The company has more than 4,000 aircraft orders to fill -- several years production
  • Foreign commercial and military sales are now 50% of revenue
  • Even if military budgets in the U.S. are reduced, U.S. commercial orders and both commercial and military orders from emerging economies should more than offset any cuts in U.S. defense spending

Investor interest:

  • I gauge individual investor sentiment by the readers of Motley Fool and 4,270 readers have given the stock a 91% vote of confidence to beat the market
  • Some of the firms giving the stock a recent upgrade are Oppenheimer, Stifel Nicolaus, Argus, RBC Capital and Deutsche Securities
  • Columnists with positive opinions have been Tobin Smith, Jim Jubal and Jim Cramer

How has the market treated Boeing? While Boeing was up 19% in the past year, Lockheed Martin ( LMT) was up 29%, Precision Castparts ( PCP) up 7% and General Dynamics ( GD) up 3%:

Lockheed Martin
  • TheStreet Ratings staff rates the stock A-
  • Revenue projected to decrease 1.80% this year and decrease another 1.30% next year
  • Earnings estimated to increase by 3.20% this year and 3.60% next year
Precision Castparts
  • TheStreet Ratings staff rates the stock A-
  • Revenue projected to increase by 17.00% this year and another 12.00% next year
  • Earnings estimated to increase by 19.20% this year and 15.10% next year
General Dynamics

  • TheStreet Ratings staff give the stock a B rating
  • Revenue projected to be down slightly by 1.10% this year and up only 0.10% next year
  • Earnings expected to be down 2.00% this year and up 4.90% next year

Conclusion: Boeing seems to be an ideal candidate for conservative IRAs on the dividend reinvestment program. The long-term revenue prospects look enormous and if they can't produce aircraft at a profit, who can? As always, keep an eye on the moving averages and turtle channels so you can add to your holdings on a dip:

Profile of Boeing

Boeing, together with its subsidiaries, engages in the design, development, manufacture, sale and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. The company operates through five segments: Commercial Airplanes, Boeing Military Aircraft (BMA), Network and Space Systems (N&SS), Global Services and Support (GS&S) and Boeing Capital Corporation (BCC).

The Commercial Airplanes segment develops, produces and markets commercial jet aircraft for various passenger and cargo requirements, as well as provides related support services to the commercial airline industry. It also offers aviation services support, aircraft modifications, spares, training, maintenance documents, and technical advice to commercial and government customers.

The BMA segment engages in the research, development, production, and modification of manned and unmanned military weapons systems for the global strike, mobility and surveillance, and engagement markets, as well as provides related services.

The N&SS segment is involved in the research, development, production, and modification of products and services to assist its customers in transforming their operations through its network integration, information and cyber applications, command, control, communications, computers, intelligence, surveillance, and reconnaissance space exploration and satellites.

The GS&S segment offers operations, maintenance, training, upgrades and logistics support services for military platforms and operations.

The BCC segment facilitates, arranges, structures, and provides financing solutions for its commercial airplanes customers and government customers. Its financing portfolio consists of equipment under operating leases, finance leases, notes and other receivables, assets held for sale or re-lease, and investments. The Boeing Company was founded in 1916 and is based in Chicago, IL. (Yahoo! Finance profile)

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.