Take advantage of the Boeing snafu

You probably have heard no-stop news regarding problems associated Boeing, the grounding of the problem-plagued 787 Dreamliner - the most technically advanced new model of commercial airplane manufactured by Boeing. Of course, when such kind of snafu occurs to any company, investors will always react with panic, leading to overreaction. This reminds me just recently what happened to BP, the UK largest oil company when they got a heavy bang due to its oil spill in the Mexico gulf 2 years ago. Investors simply gave up BP's stocks and ran away, cutting its share price over half.  Those who dare enough to get in at that time got a great reward. I was one of them.

Yes, Boeing is facing a huge headwind which may last for some time. I'm also not sure if its bottom has already set in. But there are a few reasons to make me think Boeing is a good long term investment: There is not too much competition in this airplane industry, basically only 2 companies,  Boeing and Airbus. I don't think Airbus is much superior to Boeing and it is hard for Airbus to replace Boeing's market share. Boeing is fundamentally a strong company, having survived over 100 years and gone through many difficult time periods. This time is no difference. Boeing has a huge financial muscle to ride it out as it used to. Actually based on the 2012 year end results, Boeing's commercial airplane business is quite healthy, to say the least. Boeing received 1,203 net orders last year and its capacity has run out, leading to its cumulative backlog of commercial jets rising to 4373. In other words, Boeing will be busy to simply deliver the existing orders. Boeing is also a company engaged in a lot of military business in the US. It is virtually impossible for Airbus to step in for this business sector.  Boeing is an investor friendly company in paying good dividends (currently with a yield of 2.6%) and actively buying back stocks. I think such a temporary setback for Boeing is a good buying opportunity. Of course, due to the upcoming inevitable correction of the overall market that I firmly believe, majority of stocks will be impacted on. Also, no one knows if all the bad news has already come out for Boeing. So there may be still room for Boeing's share price to slide down. What is the best strategy to buy good stocks for long term investment? Dollar-averaging! If you say want to buy 500 shares of Boeing in total, maybe you can start with 100 or 200 for now and buy more if its price continues to go down. This way, you won't miss the boat if it unexpectedly runs away to start to quickly move up, although I highly doubt it will. If it goes down further, in average you can reduce your cost. In the long run, I think this is a good time to buy Boeing with dividend reinvestment.