BOEING SHARES MAY HAVE NICE UPSIDE POTENTIAL LONG-TERM – BUT BUYING ON DIPS IS RECOMMENDED

Boeing Co.

shares rallied sharply off of the recent lows but then got hammered on October 22nd following poor earnings / guidance. That volatile trading has left the stock somewhat in “no-man's land” in the short-term. Which side will win the war after two battles have been split? Let's take a look at the fundamental and technical snapshots for Boeing... What the bulls see in Boeing… • A Treasury-beating 2.4% dividend yield • A cheap price-to-sales ratio of 0.97 • Over $5 billion in annual operating cash flow • Total cash equivalents of over $10 billion versus only around $8 billion in debt • A debt-to-equity ratio of only 60.67% and a current ratio of 1.23 What the bears see in Boeing… • Some expensive valuation metrics: o A market capitalization of $88.27 billion that trumps the enterprise value of $86.60 billion o A price-to-book ratio of 6.05 o A PE ratio of just under 15 versus 2015 estimated growth in revenues and sales of 4.2% and 3.1% • Very modest mid-single-digit net profit margins that only spin off $388 million in annual levered free cash flow (versus the $5 billion in operating FCF) The technical take on BA shares… Technicians note that Boeing stock has consolidated nicely on the monthly chart following the massive run-up from late-2011 to early 2014. They note that key support for the stock comes in at $116.32 and the upside target for the next (anticipated) up move comes in at $144.57. They arrive at their support and resistance by assigning an Elliott Wave count to the monthly chart and using Fibonacci and other measuring techniques. If the $116.32 level is broken on the downside, the next potential support level comes in at $105.45. On the way up to $144.57, BA will face intermediate resistance at $129.87 and $138.39. Overall… The best play for investors and traders in Boeing at this point seems to be to look to buy dips in the share price when they occur. BA has obviously bounced sharply off the recent lows, so some type of retracement in price should not be a surprise – perhaps after the end-of-the-month.