Trading Tips
Trading Tips
Is Boeing a Buy in 2020?
The start of the year brings new companies into focus for investors, particularly those that had a poor showing in the prior year. There are a few different ways to classify these opportunities, but most are based on being a “dog” of some sort.
Originally, the strategy was to buy the five highest-yielding companies in the Dow Index—hence the name Dogs of the Dow. But there are variations, like using 10 names, or using the S&P 500 index, or sorting by other means.
One of those means should include companies that had operational struggles in the prior year, but could see their shares soar as those troubles go away.
When we add in that factor, Boeing (BA) looks like a great buy for 2020.
The company’s problems are well-known, and seemingly aren’t going away. But the company is part of a global oligopoly for airline production, and that gives it an attractive operating structure due to minimal competition.
We also know that the 737 Max problems are solvable, even if they aren’t solved yet.
And we know that, despite the drop in revenues and earnings in the past year, a recovery is likely as soon as the fear dissipates.
The only question is whether Boeing can survive that long. Many companies don’t have the financial firepower to deal with a major crisis without having to deal with some stark cuts.
Thanks to Boeing’s low net debt, however, the company isn’t so leveraged that today’s problem creates an existential crisis. That makes Boeing a buy up to $350 per share—with the possibility to hit $450 or $500 as the 737 Max issues get solved.
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