Invest in Boeing

With the first Dreamliner delivered is it time to invest in Boeing – BA? The aerospace giant delivered its “game changing” aircraft to All Nippon Airways at a ceremony at the Boeing Everett Plant  in the state of Washington on September 26, 2011. The Boeing 787 takes advantage of many new technologies but has been a chore for the company to perfect. The delivery of the first aircraft is three years behind schedule. Half of the structure of the 787 is carbon composite materials reducing the plane’s weight and resulting in a twenty percent reduction in fuel consumption compared to jets in its class. This will allow the 787 to fly longer routes. The plane is also said to be more comfortable with features such as larger windows and storage space for carry-ons. Although the Boeing 787 may well be a game changer as Boeing claims its remains to be seen if this project will be sufficiently profitable to attract more investors to invest in Boeing. Boeing shares rose a few percent on news of the delivery of the first jet of the series. Will fundamental analysis of just how many planes Boeing and build and sell work out to enough to substantially increase company profits. Is it time to again to invest in Boeing?

Boeing was trading at over a hundred dollars a share in early 2007 before the recession and the announcement of problems with delivering the aircraft on time. The stock dipped below forty dollars a share at when the market crashed and has been at seventy-five dollars a share as recently as two months ago. Today BA closed at $62.01 a share. Dividend stocks can be attractive for long term investing and Boeing fits the bill there as it has steadily paid dividends since the Second World War. Recent figures indicate that Boeing has orders from eighty-seven customers for over eight hundred aircraft. It expects to assemble ten a month at its Everett, Washington plant, another three a month at a new plant in North Charleston, South Carolina. The price tag for the delivered jet will run above or below two hundred million each depending upon design variations. Two hundred million times eight hundred comes to roughly one hundred and sixty billion US Dollars. Depending upon just how efficiently Boeing manages production of this airplane there could a lot of cash to pass out as dividends and reinvest in future endeavors. That comes to the point of whether or not it is a good idea to invest in Boeing at this time.

With efficiency in mind it is useful to know that Boeing is using a large number of subcontractors on this project. Subcontractors include Mitsubishi Heavy Industries, Alenia Aeronautica, Korea Aerospace Industries, Global Aeronautica, Kawasaki Heavy Industries, Spirit AeroSystems, Saab, Latécoère, TAL Manufacturing Solutions Limited, Messier-Dowty, and Hamilton Sundstrand. Subcontracted assembly parts will be made and tested by subcontractors and then shipped in specially refitted Boeing jets to facilities in the USA where assembly of an entire jet is expected to take only three days! There is always a risk in picking new winners in the stock market. Jump in too soon and you might lose money. Jump in too late and you miss the boat. In deciding whether to invest in Boeing investors will need to decide just how profitable this jet will be over the long term. As always we are not suggesting one invest in Boeing or that one ignore the stock. Rather see this as an exercise in stock evaluation.

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