The Boeing Company (BA) continues growing earnings as the world hungers for more fuel-efficient airplanes, making the aerospace company’s stock still a buy candidate as the company has overcome hiccups in performance, says Gary Bradshaw, Senior Vice President and Portfolio Manager at Hodges Capital Management.
“This is a company that has a long history of producing fuel-efficient airplanes, whether it’s the 737, the 777 or the new 787, and we can see Boeing’s business being good for the next 20 years. Even though the stock has done very well recently, it was only three or four months ago when Boeing was having the battery issues, when the stock was around $74 and we were adding to our Boeing holdings. It closed today around $98.67, and yet we still think it’s a great buy, because earnings, which were $5.11 in 2012, we think will go to $6.47 this year and $7.22 in 2014. The stock trades at 13.7 times next year’s earnings,” Bradshaw said.
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Bradshaw says BA is engaging in strategies to return capital to shareholders, and the management has overcome issues with plane batteries, which are generally not out of the norm when it comes to large-scale projects.
“Airlines want to replace the older airplanes that they have and Boeing is the premier company to do that. Boeing recently raised their dividend 10%, and they started a $3.6 billion share buyback, so we see earnings continuing to grow. Additionally, Jim McNerney has done a great job in managing Boeing. They’ve obviously had glitches with the batteries, and any time you start up a new project of this magnitude there are going to be hiccups. Yet they’ve overcome them in good fashion and the stock has done well,” Bradshaw said.
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