Boeing (BA)

This is a rare company right now because you are getting a 3.5% dividend yield and probably 20% of dividend growth for the next couple of years. It basically operates in a duopoly. Has struggled of late because of a couple of concerns. One is the long-term profitability of their 787 Dreamliner. They are also transitioning to their big program with the 737 going to 737 Mac and the 770 is going to the 770X. Those are going to require working capital adjustments over the next few years. They have a five-year backlog that is rock solid.

(A Top Pick Feb 19/16. Up 10.67%.) Got really battered when he first started looking at it, and it looked oversold. If you were to Buy it here, that would be an aggressive Buy. He would be looking to sell at around $140.

The big aircraft manufacturers have been giving big discounts recently. However, this has a backlog out 5 years, so they have their growth set up for the next 3-5 years. The type of company that would normally trade closer to a market multiple at 17 or 18 times. Currently trading at about 15 times, which is good. The growth rate over the next 3 years is about 13%.

This has some resistance at around $150. Momentum started to weaken around April. The sector is a reasonably good one. He sold his holdings last fall.

A very cyclical business. Things can change very quickly in the space, and orders that were firm can become less firm. If you own this for dividends alone, he doesn’t know if that is your best bet. Dividend yield of 3.3%.

We had a recovery from the February lows, but it stopped at the 200 day moving average so he would hesitate to buy now. He would stay away from this name.

An excellent company. The premier aerospace company. As a call on the market, the market is probably upwardly bound, but only slightly. There are going to be some bumps down the road, but you are probably going to end up 5% higher on the year, which is not bad with the dividend. As a long-term hold, this is a good name.

Converting backlog into profits has been somewhat difficult for both this company and Airbus. They both faced some production delays. Because of that, there are penalties associated with revenue from customers. It is the penalties that cause the fluctuation in earnings, which translates into volatility in the share price. Finds this one very hard to model, because there is a lot of risk in the manufacturing process.

Has owned this for some time. One of the nice things about ownership in this group is that the production process has evolved to the point where they are putting out the 787 Dreamliner and others, and doing quite well from both a revenue standpoint and a cash flow standpoint. These airplanes are much more fuel efficient.

SEC is looking into the accounting that airlines can do, in spreading costs over an entire project. Not a lot of details the company can disclose on this. This stock is a great example of the amount of fear in the stock market. Since mid-December, it is off about 20%. Backlog has increased to about 7 years, they’ve increased the dividend, and demand of travellers continues to be strong. There are not a lot of negative points on the name, and yet the fear in the market is kind of predicting that there is going to be a slowdown.

Another forgotten name. Just a giant big name that has been under pressure for a long time. It is at its 200 week moving average level. The volume hasn’t shown it, but it has had a very messy run this year. At a great spot to give it a go. If the markets can hold here, this is an easy $10 to the upside.

This chart is very, very typical of a lot of stocks right now. They are moving sideways and kind of trapped in “never never” land, like the market has been in the last 1.5 years. You want to watch this to make sure it does not break down. At this point it is fine. If it bounces off the current support level, where it is trading right now, it should be fine.

World’s largest commercial aerospace manufacturer. A good solid company over the long-term. but is cautious on it in the short term. We have just gone through a great commercial aerospace upside cycle in the last 7-8 years. Their 4^th quarter was a concern. He thinks they are starting to lose sales. Would be interested at the $100 level, but at these levels he is cautious.

He wouldn’t be opposed to this as an entry point. They have a new CEO, who has made it clear that he is not going to make any drastic changes. 70% of revenues comes from commercial jets. What is going to determine where the stock price goes over the next 6-12 months is the 787 plane. Deliveries have been going well which is the positive. The challenge is that they spent more money than originally anticipated, so there has been a bit of margin compression on the 787’s. He is not concerned about the 3.7% dividend yield.

He wants the chart to confirm his strategy. The airlines are super cyclical. Nothing is flagging in the transport space.