#3 - Boeing (NYSE:BA)
Boeing (NYSE: BA) - The problem: Too much of a good thing
To call Boeing a hot stock would be an understatement. The airplane manufacturer has problems on two fronts. First, it has a valuation problem. Since the beginning of 2017, the manufacturer has seen its stock move from $140 per share to an eye-popping $350 per share. Who do they think they are, a high-flying tech stock? And that’s the problem. Boeing is currently selling at around 22x earnings while offering a dividend yield of 2%. By itself, that wouldn’t be too bad. However, historically Boeing has sold for under 20x earnings and paid out a dividend in excess of 3%.
The other problem is that they may be in danger of lower earnings. Boeing is not the only airline manufacturer ordering new planes. However, we’ve seen this movie before and it doesn’t end well for airline stocks. Typically airlines have a difficult time keeping their expansion in line with higher profits. This puts pressure on margins, which in turn drives down demand for new planes. And of course, the industry is always sensitive to fluctuations in oil prices which extend to jet fuel. And if the stock needed any more headwinds, they face uncertainty surrounding the upcoming mid-term elections. If the Trump administration loses control of Congress, it would likely mean a reduction in defense-related projects.
About Boeing
The Boeing Company, together with its subsidiaries, designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and services worldwide. The company operates through Commercial Airplanes; Defense, Space & Security; and Global Services segments.
Read More - Current Price
- $155.17
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $211.29 (36.2% Upside)
