Boeing? Time to buy or time to sell?

[marylander1940]

OP note: companies must decide if outsourcing to a hidden factory is worth the risk of quality control.

Boeing finds new flaws in 737 MAX fuselages - The Washington Post

WWW.WASHINGTONPOST.COM

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Boeing plans to rework 50 jets after misdrilled holes were discovered during the production process.

Boeing's problems rooted in shift away from engineering culture | Opinion | sharonherald.com

[+ Vegas_Millennial]

It would depend on how much exposure one already has to aviation manufacturing in their personal portfolio.  I try not to time the market.  I make sure I own a little bit of aviation manufacturing stock at all times.  Boeing or Airbus, it doesn't bother me which one.

[handiacefailure]

I definitely wouldn't be buying it.   

Keith Fitz-Gerald, recommends shorting it.   I value his advice and have made a lot of money off his tips.   He seems to think Boeing will go bankrupt, but I don't see that happening seeing the only competition they have is Airbus and they are a couple years behind in orders.

[+ augustus]

6 hours ago, handiacefailure said:

I definitely wouldn't be buying it.   

Keith Fitz-Gerald, recommends shorting it.   I value his advice and have made a lot of money off his tips.   He seems to think Boeing will go bankrupt, but I don't see that happening seeing the only competition they have is Airbus and they are a couple years behind in orders.

It would be disastrous if Boeing went under.  It's a big contributor to our exports.  We already run a trade deficit as it is.  Boeing will recover I'm sure.

[mike carey]

17 minutes ago, augustus said:

It would be disastrous if Boeing went under.  It's a big contributor to our exports.  We already run a trade deficit as it is.  Boeing will recover I'm sure.

I agree, but doubt that it is in any danger of bankruptcy. If it were a stand-alone commercial aviation company I would be less confident but with its substantial military division far less so. Still, it's a big source of US exports and a big employer and both of those are intrinsically valuable to the economy, both of the whole country and the regions where it and its suppliers have their plants. Recent events have illustrated that maximising profits can be at the expense of long term value and Boeing management would do well to take that lesson on board. If they can. Building mutually beneficial relationships with suppliers (if it persists in out-soucing parts of its manufacturing process to unfortunately named companies like Spirit), its work force and its local communities and to governments rather than rent-seeking for short-term profit might be a useful business model, even if it has a utility rate of return.

I read a critique of management practices in a different context that said company management is prone to manage in their own best interests rather than the best interests of shareholders or any other stakeholders. I wonder if that is a factor in Boeing.

[+ stevenkesslar]

On 2/7/2024 at 6:10 PM, handiacefailure said:

Keith Fitz-Gerald, recommends shorting it.   I value his advice and have made a lot of money off his tips.   He seems to think Boeing will go bankrupt, but I don't see that happening seeing the only competition they have is Airbus and they are a couple years behind in orders.

I was curious.  So I Googled his name and "Boeing" and came up with this post from Jan. 29 in which he lays out his concerns about Boeing.  As you say, all his investment advice sounds spot on.

Buy defense stocks

GOL, one of Brazil's largest airlines, did just go bankrupt.  They were actually doing okay in terms of operating costs, given the global recovery.  But their problem was all the debt they got loaded up with during the pandemic.  Boeing is somewhat in the same ballpark, according to FT.   Fitz-Gerald sounds right in saying the pain probably is not over.

One thing I did learn is that when I read the word "bankruptcy" in print, I should believe it.  Some Brazilian financial newspaper leaked that GOL was considering filing for bankruptcy, which led to an immediate huge intraday drop.  The company issued a statement saying they were in negotiations, blah blah blah, and nothing would happen in January.  So the stock recovered to pretty much where it had been.  During that brief recovery, I sold half my shares at a small profit.   I figured I had a few weeks to sell the rest for a little more, if the recovery continued.  Then they unexpectedly filed for bankruptcy on Jan. 25.  They essentially admitted they lied about their timeline once the news leaked that bankruptcy was in fact imminent, to stay ahead of the curve.  I'm kicking myself for not selling everything.  But when I net out what I made in short term gains over several years riding that wave, I came out with only a small loss.

I like what Fitz-Gerald says about defense stocks.  I bought RTX late last year and am up about 12 % as of today. Every once in a while going back half a century Raytheon's value drops 30 to 50 %.  In this recent case, like Boeing, mostly due to their own errors.  And it is always a good time to buy, because they always recover.  Unlike GOL, which was a failed exercise in market timing, that is one I bought for the reason Fitz-Gerald said.  It is a long cycle investment with a decent dividend.

Where he sounds particularly spot on is that all tech is not the same.  And, mostly, the bigger the better:  like AAPL and MSFT, which he mentions.  It seems like this market is all tech, all the time.  I got a big cash windfall when I sold a rental home last August.  The shares of AAPL I bought then are up about 5 %.  Not bad.  The shares in FNGU and SOXL, which are 3x bullish ETFs, are both up about 75 %.  It's all the big tech names, AAPL, MSFT, NVDA.  What could possibly go wrong?

If you bought Boeing when the S & P 500 peaked in 2000, you would have done just as well as buying it or the S & P.  Both are up a little more than 3x their 2000 high.  RTX is more like 5x its 2000 value.  Microsoft, one of the big winners of the 2000 tech bubble, is now worth 7x its 2000 value.  Apple comes in at about 140x its 2000 value.  Again, it seems like all tech, all the time.

That said, at some point the tech trip is going to get very bumpy.  And when it goes bad it will feel like being on one of those Boeings when the doors blow out mid-flight.  Happily, it's easier to parachute out of tech stocks than it is a Boeing jet.  Meanwhile, enjoy the blue skies!

 

Edited February 10 by stevenkesslar

[handiacefailure]

Keith Fitz-Gerald talked about Boeing again today in his email.   I;ve made quite a bit since I've been following him.   

According to the FAA, a single engine Diamond DA 40 aircraft, carrying two people was midair when the pilot reported losing its door flying over upstate NY. (Read) 

Meanwhile, Boeing’s orders and deliveries are apparently drying up. (Read) 

I suggested a pairs trade mid-December – long Airbus and short or avoid Boeing – which continues to play out well. Airbus shares have returned 3.19% while Boeing has lost –17.77%. 

Sadly, I continue to think that what’s happening could be the end of Boeing as we know it.  

Meanwhile, continue to watch for a Chinese maker to offer a long-haul aircraft to global markets within the next few years. Using stolen – err, carefully researched – technology and specifications. 

[TonyDown]

On 2/9/2024 at 6:12 PM, stevenkesslar said:

I was curious.  So I Googled his name and "Boeing" and came up with this post from Jan. 29 in which he lays out his concerns about Boeing.  As you say, all his investment advice sounds spot on.

Buy defense stocks

GOL, one of Brazil's largest airlines, did just go bankrupt.  They were actually doing okay in terms of operating costs, given the global recovery.  But their problem was all the debt they got loaded up with during the pandemic.  Boeing is somewhat in the same ballpark, according to FT.   Fitz-Gerald sounds right in saying the pain probably is not over.

One thing I did learn is that when I read the word "bankruptcy" in print, I should believe it.  Some Brazilian financial newspaper leaked that GOL was considering filing for bankruptcy, which led to an immediate huge intraday drop.  The company issued a statement saying they were in negotiations, blah blah blah, and nothing would happen in January.  So the stock recovered to pretty much where it had been.  During that brief recovery, I sold half my shares at a small profit.   I figured I had a few weeks to sell the rest for a little more, if the recovery continued.  Then they unexpectedly filed for bankruptcy on Jan. 25.  They essentially admitted they lied about their timeline once the news leaked that bankruptcy was in fact imminent, to stay ahead of the curve.  I'm kicking myself for not selling everything.  But when I net out what I made in short term gains over several years riding that wave, I came out with only a small loss.

I like what Fitz-Gerald says about defense stocks.  I bought RTX late last year and am up about 12 % as of today. Every once in a while going back half a century Raytheon's value drops 30 to 50 %.  In this recent case, like Boeing, mostly due to their own errors.  And it is always a good time to buy, because they always recover.  Unlike GOL, which was a failed exercise in market timing, that is one I bought for the reason Fitz-Gerald said.  It is a long cycle investment with a decent dividend.

Where he sounds particularly spot on is that all tech is not the same.  And, mostly, the bigger the better:  like AAPL and MSFT, which he mentions.  It seems like this market is all tech, all the time.  I got a big cash windfall when I sold a rental home last August.  The shares of AAPL I bought then are up about 5 %.  Not bad.  The shares in FNGU and SOXL, which are 3x bullish ETFs, are both up about 75 %.  It's all the big tech names, AAPL, MSFT, NVDA.  What could possibly go wrong?

If you bought Boeing when the S & P 500 peaked in 2000, you would have done just as well as buying it or the S & P.  Both are up a little more than 3x their 2000 high.  RTX is more like 5x its 2000 value.  Microsoft, one of the big winners of the 2000 tech bubble, is now worth 7x its 2000 value.  Apple comes in at about 140x its 2000 value.  Again, it seems like all tech, all the time.

That said, at some point the tech trip is going to get very bumpy.  And when it goes bad it will feel like being on one of those Boeings when the doors blow out mid-flight.  Happily, it's easier to parachute out of tech stocks than it is a Boeing jet.  Meanwhile, enjoy the blue skies!

 

I agree that RTX is a solid company however it is not the same as Raytheon.   Raytheon merged with UTC which ultimately is guiding the ship IMO.

That said, RTX seems agile and their products are impressive.

I'd buy RTX before Boeing, mostly because Boeing manages on the cheap IMO. 

Driving costs down is important but has Boeing taken their eye off the ball?  

[TonyDown]

Boeing is getting very unpleasant publicity this evening on Last Week Tonight. 

In the meantime Boeing has been sued by passengers on that Alaska Airlines flight with door plug that blew out.

I honestly don't know how this might affect the stock tomorrow but I am certainly going to watch tomorrow's trading.

 

3 passengers on Alaska Airlines Flight 1282 where door plug blew out sue the airline and Boeing for $1 billion

WWW.CBSNEWS.COM

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The lawsuit seeking $1 billion in damages was filed on behalf of...

 

[handiacefailure]

Keith Fitz-gerald mentioned Boeing again in today's email:

 

4 – The only way Boeing recovers 

Hopes are running high that Boeing’s “back” now that is reportedly in talks to purchase Spirit, which makes the fuselages for Boeing jets. Both manufacturers have been struggling with production problems as they try to turn out Boeing’s top selling plane. (Read) 

Continue to short, avoid or keep on the putskies I suggested a while ago. BA shares are down -21.47% YTD while Airbus and Embraer have returned 9.38% and 17.55% respectively. 

$180 a share, potentially lower. 

I could see $150 without much of a stretch if this keeps up, or down as the case may be. 

MyPOV: The only way forward is a complete reset at the C-level and holding every regulator who signed off on what’s happened to date accountable. Btw, I don’t think I’m off base here; whistleblower Ed Pierson, himself a former senior Boeing manager, believes the entire 737 fleet should be grounded. (Read) 

[+ stevenkesslar]

On 3/4/2024 at 10:55 AM, handiacefailure said:

I could see $150 without much of a stretch if this keeps up, or down as the case may be. 

A lot less.  $100?

That's a little bit of an arbitrary number.  But Boeing hit lows around there, plus or minus $20,  in 2016, 2020, and 2022.  Why not 2024?

The more ridiculous thing, knowing very little other than what Fitz-gerald sounds right about, is their EPS is -$3.87 for 2023.  Which is better than 2022.  And 2021.   And 2020.  And there is no dividend.

It seems like like one of those crazy AI stocks.  Except Marvel, as an example, only has a loss of -$0.19 for 2023.  And it is getting slammed today for not meeting expectations.  And it is smothered in the sweet fragrance of AI.  Not the stench of lawsuits, and airplane doors blowing off.  This could definitely nosedive.

 

[Welshman]

Considering that the stock price has ranged from $176.25 on October 25th last year and $267.54 on December 21st in the same year (an increase $91.29 (51.8%) in around twelve weeks, it is clear that this stock has become very volatile of late and that is not a good basis for investment

[marylander1940]

 

Kayak now allows you to filter the plane... 

How To Use Kayak’s Boeing 737-9 Max Filter | Kiplinger

WWW.KIPLINGER.COM

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Online travel site Kayak offers an enhanced filter that allows you to exclude the Max 8 and 9 planes from your search.