Market gives us another chance to take advantage of the Boeing snafu again

Exactly 3 years ago in Jan 2013 I make a bold call to "Take advantage of the Boeing snafu", when Boeing (BA) was suffering from a lot of negative news with a quite depressed stock price around $75. It was a lucky but very timing call as BA had since marched up very nicely to have reached as high as $158 recently. A double in 3 years for such a blue chip is by no means a small gain. Now we may likely get another chance to take advantage of the great negativity on BA at the moment to bet on it for good days in the coming years.


Together with the sharp correction of the whole market, the BA shares has started to skid recently and has dropped to its lowest altitude in 2½ years last week after it beat fourth-quarter estimates but followed with a disappointing forecast for profits and airplane deliveries for 2016. Believe or not, industry analysts have been expecting Boeing to cut 777 production for well over a year now, but when the company finally pulled the trigger, investors reacted as if they never expected the change. This is typically a market overreaction in my book. I'm not arguing that BA will not have some difficult time in the near future but this is a very temporary setback. After all, BA still has an existing $490 billion order backlog. On top of that, according to Boeing, there will be a long-term need for 38,050 new airplanes (up from 33,500 jetliners in the projection we cited back in 2011). While this is not something that will be manufactured by BA alone of course, you can bet BA will has a substantial portion to share to boost its bottom line in years ahead. With this 26% haircut from its top with the share price around $120, BA is paying a very respectful dividend yield of 3.7%. At this price, BA is not expensive at all and buying it at this level for long term may turn out to be a very good decision. Please note, I won't call BA a "Strong Buy" at the moment as the overall market is not very pretty, which may not allow BA to jump high immediately from here. It may continue to fluctuate for a while. But starting to accumulate its shares for long term for dividend reinvestment is not a bad idea at all!