Boeing Readies for Takeoff as Shares Appear to Hit Bottom

Tickers in this article: BA SPR

NEW YORK (TheStreet) -- Boeing shares are "grounded" right now even though there's nothing fundamentally wrong with the stock.

At around $121, shares of the Dow Jones Industrial Average member are down nearly 12% for the year to date. Since hitting a 52-week high on Jan. 22 of $144.57 shares nosedived more than 18%, hitting a 10-month low of $117.87 on August 6.

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Yes, the company hasn't had an easy time with its production system for building its 787 Dreamliner but Boeing is still on track to build 110 of them by year's end. That's 70% more 787s than were built in 2013, with the number slated to increase.

Investors forget that Boeing is working on fulfilling orders for over 1,000 Dreamliners booked over the past decade. The faster the company can deliver these fuel-efficient state-of-the-art jets, the quicker it will recover the nearly $33 billion spent so far to manufacture them.

As of the end of July Boeing had 273 net orders for wide body jetliners versus a minus 27 for Airbus due to cancellations, according to Reuters.

When it comes to its business model Boeing still has its lucrative defense division fulfilling orders from governments worldwide. With situations heating up in Ukraine and the Middle East I expect defense contract work to be robust over the next 12 months.

BA Chart
BA
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Boeing has 837 back orders for all types of planes so far in 2014 with a record 324 orders in July alone. This helps explain its remarkable year-over-year quarterly earnings growth of 59%.

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The company's trailing 12-month return-on-equity (red line) is a stellar 42%. Like passengers awakening from an on board nap, investors are beginning to wake up to Boeing as a strong total return investment theme.