Boeing Co (BA) — This is the world’s largest manufacturer of commercial jets and the second largest maker of military weapons.
S&P Capital IQ Equity Research rates BA stock a “buy,” based in part on its long-term government contracts, a solid cash position and a strong backlog. While its analysts currently estimate this year’s projected sales growth of about 5% to slow to just 2% next year, this could be revised significantly higher as the war on ISIS picks up momentum.
Capital IQ expects Boeing will report earnings of $8.35 per share this year and $9.72 next year. Their 12-month price target of $180 is 18.5 times the 2016 EPS estimate, which makes it conservative compared to the stock’s 10-year average P/E of 19.5.
Like many blue chips, BA stock has spent most of 2015 in a consolidation pattern. But it is currently pushing hard to break from an important resistance line at $150. If successful, this would target a major move higher.
I seldom anticipate technical breaks; however, three factors are very bullish:
- Upside volume has been positive since mid-October.
- The 50-day moving average is accelerating its move higher and is just 1 point from crossing the 200-day moving average and flashing a golden cross, a long-term buy signal.
- BA stock fell just 5 cents Monday on a very weak day for stocks.
Shares are just $1.55 from a breakout that would target an advance to $175 within three months, which is nearly 18% above the current price. You may also want to purchase BA stock as a long-term investment in the aerospace/defense industry. The company pays an annual dividend of $3.64 for a 2.5% yield.
