Boeing (BA)

Owned this for many years, but just sold it a month ago, because it had done so well. As the price of something rises, its value tends to drop. This is trading at about a 50% premium to its 10-year historical average. That represents a lot of risk. He would love to buy it back, but it is a little overpriced as a stock.

Had owned this for a number of years, but sold it too soon. The stock has done quite well. Typically, you buy airline manufacturers when they are building their backlog. 30% of their business is defence, a sector that has done quite well this year. The stock should continue to do well because of its defence exposure. Eventually, as they start building out their planes, they should generate a lot of cash flow, which is a positive for the stock.

It is a good name and there is a cyclical move into this space. The PE is at 22-23 times and is at the high end of the ten year range. The chart looks good. Hold it and use a stop loss.

One of the two stocks that has been propelling the Dow. Whether that continues remains to be seen. Defense stocks in general have been doing well and the airline industry around the world has been doing well also. This one has been doing well and he would almost be a seller of it now.

(A Top Pick September 7/16. Up 83.03%.) This has done fabulously well. They are in full production with the 737 and the 787, and has really become a cash flow story. Recently sold this based on “price exhaustion”, where a company does everything you expect of them, but the price rises to such a point that the valuation becomes extreme. Right now, it is trading at about 150% of its normalized multiple. It normally trades at 15-16 times earnings and is now trading at 23-24 times.

A US defensive stock? To a large extent, you have missed a lot of it. They are not cheap. His choice would be General Dynamics (GD-N) or this, which has the commercial side, but also has defence.

(Market Call Minute.) Good solid company, but not a big grower and is super expensive now.

Facing headwinds from a cycle peak in airplanes. The valuations are not that stretched. At this point you really better believe that there is another leg to the cycle. He likes industrials and he likes aerospace and defence.

They have been buying back stock and it has not done much for the valuation. He thinks they should be reinvesting in the business. Anything above fair market value gets him worried. You are riding a bit of momentum, but not value.

She would not be a new buyer. It took off last fall, up 50% on good results and increased defense spending, etc. It historically has a run and goes sideways for a long time. You hold it ready for the next run.

US defence for a long-term hold? Defence has run up dramatically on the so-called Trump trade. The proposed budget had a $54 billion increase in defence spending. He has played the sector a little differently through owning Boeing, a commercial producer, but also a defence contractor. A small piece of their business is dedicated to defence. The company has about a $500 billion backlog, and on the commercial side they are in full production. This is really a cash flow story. Their planes are really in high demand because they are fuel efficient, which represents profitability to their customers.

This has exposure to the defence space, but also to the commercial airline space. If you want a pure play in defence, you might look at General Dynamics (GD-N), Lockheed Martin (LMT-N) or Raytheon Corp (RTN-N).

A good defence stock? He would caution on rushing in to buy an industry just because a political party says they are going to increase defence spending. Generally speaking, it seems to be a disconnect between what they say and what they actually do. However, defence stocks are not terribly expensive if you look at the free cash flow yield. Lockheed Martin (LMT-N) is his favourite because it is the most profitable and diversified. He has looked at Boeing (BA-N) which is very profitable. Lockheed Martin would be his 1^st choice, and Boeing would be 2^nd.

A great company to own as a play on defence and infrastructure spend. It has had a great run since Trump got nominated. Defence will go up. You buy this on dips.

They had lots of ups and down due to Trump’s tweets. Ultimately, they are at a good valuation place, expecting almost 30% growth this year. It still has a good valuation at 18 times next year’s earnings. They are doing a good job. The defence sector is once place the government may be increase spending.