Shares of Boeing (NYSE:BA) have certainly felt the effects of the ongoing tariff and trade wars between the U.S and China. Boeing stock is now down over 17% since making all-time highs at the $390 level in early October. Certainly the proposed tariffs could have some impact on revenues going forward. The probability and impact of the potential tariffs, however, is beginning to reach an extreme. I expect Boeing to head higher over the coming months, especially once a trade deal is reached.
BA is looking much more attractive on a fundamental basis. Boeing now sports a P/E ratio approaching 20 and nearing the lowest levels since July 2017, which proved to be a great time to get long Boeing stock. The company has beaten earnings estimates handily three out of the past four quarters, yet BA stock is actually lower over that time frame. This combination of better earnings and a lower stock price makes Boeing a much better value at current levels. It also pushes the yield on Boeing stock above 2%, another benefit for long term holders.
Boeing stock is also fast approaching major support at the $310 level. This is an area that has held on several occasions in the past nine months, with each occasion being followed by a strong rally. Money flow is also nearing levels that has coincided with significant bottoms as well. A bounce is likely due for Boeing, especially given that BA stock is down 10% over the past three tradings days alone.
In my previous post on Boeing stock from Sept. 28, I had a much more bearish view on BA. I expected Boeing to pull back significantly, which proved to be the case. Now that BA has dropped sharply, my viewpoint has changed-because price matters. My past concerns regarding over valued fundamentals and overbought technicals have been rectified by a cheaper share price.
Both longer-term investors and shorter term traders should look to consider adding Boeing stock to their portfolios on any further weakness. This applies especially to traders like myself who feel the recent Chinese tariff tirades will end with a deal getting done.
Tim Biggam may hold some of the aforementioned securities in one or more of his newsletters. Anyone interested in finding out more about Tim and his strategies can go to https://marketfy.com/item/options-and-volatility.