For the last couple of years, anyone advising caution on Boeing (NYSE:BA) stock has wound up looking pretty dumb. Unfortunately, I’m one of those people. I argued in 2017 that it was unwise to invest in Boeing stock at the current price — and made a similar argument in December, with BA trading at about $300.

Boeing stock has gained another 19% since then. But the breathtaking rally in BA — which has nearly tripled from early 2016 levels — has slowed of late. The stock basically hasn’t moved since mid-January, as some of the valuation concerns cited by observers like myself perhaps have dissuaded investors.

BA still looks expensive, trading at nearly 21x forward earnings. That’s not a terribly high earnings multiple in this market, admittedly. But for a cyclical manufacturer like Boeing, it is a big number this late in the cycle. Investors certainly can choose to pay that price — but the argument to invest in Boeing comes down to two core questions.

A Cyclical Stock

There’s an odd similarity between Boeing and semiconductor stocks, perhaps most notably (and, again, oddly) Micron Technology (NASDAQ:MU).

Both stocks historically have been classically cyclical stocks. For Micron, cyclicality came more from memory pricing, which is impacted by supply. For Boeing, which essentially operates a duopoly with Airbus SE (OTCMKTS:EADSY), the cyclicality comes from demand.

That demand for the most part came from Western economies, and primarily the U.S. — 70% of 2005 revenue was domestic, for instance. The economy would strengthen, U.S. airlines would do well, and they would buy Boeing planes. Boeing’s earnings would rise. The economy would turn south, orders would be canceled, and Boeing’s earnings would fall. (Earnings per share fell by nearly half in 2009, for instance.)

Given that U.S. airlines have been notorious destroyers of capital, Boeing’s reliance (at least for its non-government business) on those customers created a great deal of variability in earnings — and left investors constantly fearing a downturn. And that variability kept a cap on Boeing’s earnings multiples. Like heavy industrial equipment producers Caterpillar (NYSE:CAT) and John Deere (NYSE:JD), investors were hesitant to pay market multiples at or near the top of the cycle.

The Boeing Shift

Indeed, as recently as 2016, skeptics were pointing to Boeing’s cyclicality as a reason for caution. That year, Cannacord Genuity downgraded the stock, arguing that its free cash flow growth wasn’t a result of a change in the business — but just a beneficial cycle.

Over the past two years, however, that sentiment is starting to change. For one, Boeing has built its government and defense business, which is far less reliant on economic factors. Secondly, the rise of the middle class in Asia, in particular, has raised hopes that the cycle — if it ends — will last for decades to come.

After all, there are literally hundreds of millions, if not billions, of new airline customers being created by rising prosperity overseas. And that’s already been reflected in Boeing’s numbers. While 70% of 2005 revenue was domestic, the figure was just 45% last year. And it’s likely to come down even further.

In turn, Boeing’s earnings multiples have expanded as those earnings have grown — which isn’t always the case with a cyclical stock. Indeed, a 20x+ price-to-earnings multiple for Boeing stock last decade likely only would have come when news was relatively negative, and investors bought the stock anticipating a cyclical boost in the years to come.

But investors now are willing to pay that multiple during a strong period, because they believe at worst the strength will last for years to come. Any investor willing to invest in Boeing stock now has to believe that as well.

The Price

And even though I’ve been far too cautious before, an investor also has to be willing to trust the business over the price. I covered a very similar situation just this week in Home Depot (NYSE:HD). It’s a wonderful business at a seemingly high price.

There are similarities — though Boeing should be moving away from the cyclical exposure that Home Depot still has. Both stocks trade at similar forward earnings multiples, in fact. And in both cases, an investor at least can hope for a better price.

After all, this is a shaky market — and BA stock has offered a few dips of late. There’s certainly a possibility that BA will be available at a lower price at some point reasonably soon.

Whether an investor wants to keep it simple and own the business at these levels, or try to trade around a position or wait for a pullback largely is a matter of personal preference. Personally, I have little doubt this is a wonderful business to own. My concerns have largely centered around price – but, again, I’ve been wrong on that front.

Whether an investor wants to invest in Boeing now in part comes down to where the market is headed over the next few months. If it goes lower, then just maybe BA stock will go on sale.

As of this writing, Vince Martin has no positions in any securities mentioned.