Boeing (BA) — one of our "fallen angel" recommendations — is finally attracting value investors who largely abandoned the stock following the 737 Max crashes and the government’s decision to ground the aircraft, notes Jim Powell, editor of Global Changes & Opportunities Report.
A few months later, the Covid-19 pandemic all but eliminated air travel throughout the world. It was a double punch that left Boeing with few supporters.
Now, both of Boeing’s problems appear to be on the mend. In October, the European Union’s top aviation agency beat the FAA to the punch by clearing the aircraft for commercial service.
American Airlines (AA) promptly announced it plans to put the Max back on its flying schedule by the end of the year — pending final FAA approval.
Worries about catching Covid-19 while flying is another matter. The American public has been grounded since March with no visits to grandma, no vacations, no family reunions, no business junkets to nice resorts, and so on. Millions of people are sick of being cooped up at home and are itching to travel again.
When the air travel logjam breaks — and doesn’t result in big Covid-19 spikes — I think the airline industry will be overwhelmed with business, and so will every company that serves it. The change should be a classic rags to riches story.
Meanwhile, Boeing reported a $449 million loss in the third quarter — compared to a $1.2 billion profit during the same quarter last year. Boeing is reducing its exposure to red ink by laying off another 7,000 workers. The company is also cutting costs in all its operations.
On balance, Boeing’s outlook looks better than it did earlier this year. If you have been waiting for enough good news about the company to justify buying the stock, I think you have it. The best investment plan should be to buy a little at a time over the next several months.