A stalwart of American industrial strength, aircraft manufacturer Boeing (BA) is doing well. Just last month, the world's largest plane maker reported delivering 762 jetliners in 2015, besting its target of 755 to 760. Chief rival, Airbus Group, was ahead in terms of orders, but Boeing delivered more planes.
Demand for aircraft should remain strong as less developed countries modernize and improve their economies. A key example is India: The Associated Press just reported that the number of air passengers in India jumped 20% in the last year. Even so, Indian air travelers number about one-fourth the number in China, despite the two countries having similarly sized populations. The Indian air travel industry has a lot of room to grow, as do the air travel industries of other developing countries.
Boeing's stock closed last year at about $145, and in the ensuing month and a half, it has lost about 20% of its value; spurred, at least in part, it seems, from a report that the SEC is investigating the company's accounting methods. To me, this spells a buying opportunity.
Boeing is a strong company in a strong industry and in a strong position within that industry. Its stock is down, and now appears a good time to take advantage of the stock's selloff.
To pick stocks to recommend, I rely on a series of automated strategies that mirror the investment techniques of well-known Wall Street gurus. When I created these more than a dozen years ago, I included James P. O'Shaughnessy's strategy, which is the strategy now saying Boeing is a good buy. It likes the company's huge market cap of $77 billion, strong, positive cash flow per share, above average number of outstanding shares, and trailing, 12-month sales topping $96 billion.
Many companies pass these four tests. To choose the elite top 50, the strategy considers one additional variable: dividend yield. Boeing makes it into the top 50 with a solid 3.75% yield.
Air travel today involves many hassles and much unpleasantness, but Boeing is not feeling that pain. It is flying high, based on strong demand and a solid line of desirable products.