The aerospace stock everyone is talking about

by | 11 Jan, 2018

Nordstrom Kohl's Target Macys

A stationary Boeing 747 Dreamlifter – at 65,000 cubic feet (1,840 cubic meters) the cargo hold is the largest in the world for an aircraft

Shares in aircraft manufacturer Boeing (#boeing – $BOE) moved up by a staggering 90% over 2017, a gain which is highly impressive for a blue-chip stock.

As a provider of military aircraft and missile systems through its ‘Defense, Space & Security’ division, Boeing benefited greatly from Donald Trumps promises to increase defense spending in the USA. Not only this, but solid global economic growth has driven a resurgence in jet aircraft sales, leaving Boeing flush with record free cash flow (to the tune of around $10.5 billion), a key profitability measure watched by investors for industrial stocks.

Morgan Stanley analyst Rajeev Lalwani said if management executes on another year of growth, tax reform materializes and free cash flow multiples catch up with peers, one can expect the stock will see “another +50 per cent year.”

However, while the hopes of increased government spending on defense, general economic expansion and a large backlog in plane orders have pushed the stock to record prices, so far a real major increase in defense spending is only a pipe dream in the USA – Trump is limited in what he can do to increase spending because of the 2011 Budget Control Act.

Not only this, but sales at the firm were actually down compared to 2016 and 2015, with gross profits shrinking too. These factors may prompt some skepticism from investors who could doubt Boeing can live up to expectations. Delivering airplanes is a difficult business, and a delivery can take years to execute after an order is received.

Regardless, Boeing booked orders for 912 commercial airplanes in 2017 – the 7th highest annual total ever, giving the firm a backlog equal to 7 years worth of production.

Since 2012 Boeing has pumped back nearly $40 billion to its investors through dividend and share repurchases, the question now is – can it keep it up?

Related: Equities in focus: worst & best performing U.S. stocks in 2017

Nordstrom Kohl's Target Macys

A stunning 2017 run

Want to learn more about the markets and how to become a better investor?

Download the Invstr App now.

All emails include an unsubscribe link. You can opt-out at any time. ​See our privacy policy.

ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

Download on the App Store           Download on Google Play

ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

Share This