When you sell in desperation you always sell cheapPeter Lynch
Boeing’s Stock was flying at levels touching US $ 350 in February 2020 when it suddenly lost oxygen thanks to the Corona Virus market crash and made an emergency descent down to a level just below US $ 90 in March. Then on news of stimulus economic package it commenced a steep climb and within days it went up to US $ 158 .73 on 25 March 2020. What next ? Will it level off around 160 , climb further or descend ?
During the COVID 19 market crash Boeing hit a low of US $ 89 that was a loss of 77 percent from its 52 week high of US $ 398.66. The stock came down as the market crashed but it came down more than the market. Broader market S&p 500 index was down 35 percent from its 52 peak weak.
In the past few days when the market rallied on the news of economic package the Boeing stock rallied a lot more than the broader market.
Boeing ( Stock Symbol BA)is the largest aerospace and defence firm . The airbus and the Boeing have duopoly. Hence borrowing Warren Buffet’s favourite term , I would say Boeing has a wide moat. Boeing has moderately strong financial position and has US Government support . Boeing has employees in all 50 states , the number of total employees is 161000. US Government has no choice but to salvage the company from present temporary troubles. Boeing company has backlog of widebody and narrowbody aircrafts. Has strong financial position.I agree with the Boeing company’s statement :
“In the near-term, Boeing’s priority remains a safe return to service of the 737 MAX. Despite this challenging time, we operate in commercial aviation, defense and global services markets estimated at $8.7 trillion over the next 10 years, and we remain focused on capturing these opportunities and delivering on our commitments. We believe this strong foundation will support our investments in future growth and generate consistent and compelling returns for our shareholders. “
The corona virus issue will be over within a few months which has dragged down the market , shutdown the cities and countries and the air traffic. Once its over the airlines will need more and more planes and Boeing being the leader will be in an advantageous position. Assuming Boeing’s per share earnings USD 15 in year 2021 , and a reasonable P/E ratio of 15 , Boeing stock may climb to USD 225 next year, that is a gain a of about 28 percent from 25th March’s closing price . However due to the Corona Virus issues , Boeing may have to pass through turbulent weather and that may be good for investers . If the Boeing stock goes down from current price then it will be an even better value. Just a week back the stock was trading below 100 and today 26 March around noon time its trading at 181 . If in the coming weeks it goes down along with the market it would be a great opportunity to buy this stock.
Disclaimer : The future is unpredictable . Stock prices in the long run generally follow the earnings. The readers are urged to do good research before taking a position in Boeing stocks. The author does not hold any position in Boeing Stock.