Airbus (EADSY)

Pullback on traffic and safety issues in the US. Backlog of 10+ years. 20% of its business is European defense, from fighters to drones. An easy story. Slow, steady upward trend. Yield is 1.11%.

A long-term hold. They had a software glitch to their A320s and a production issue with a few A320s. The street is worried they won't meet their production targets, so shares have been weak lately. They are back to pre-Covid production levels. Demand is very strong, through the 2030s. Would buy it here.

There is an insatiable demand globally for new aircraft so there is a huge backlog. The big hold back is engines. Airbus has 50 to 60 planes waiting for engines. Boeing has had issues. He still owns but is trimming.

One of two large players in global commercial airline business. French business with strong business prospects. Overall macro theme is very strong. Oligopoly style business with excellent market share. Expected middle class growth globally will keep growth and earnings growing. Would recommend at current share price. Good long term hold. Excellent brand name with near global recognition. 

They're trying to make more narrow-body airplanes, but suffer supply chain problems. So, they've guided down which impacted shares. But they have 10 years' backlog. The dip now is an opportunity.

There are some supply issues short term but it has a backlog for the next decade. It is a duopoly and its main competitor is facing huge issues. There are two other businesses that you are getting for free. The defence business in Europe is doing well. It trades at 20X earnings with solid growth over the next decade.         Buy 3  Hold 0  Sell 1

Still, there are some caveats: Airbus’ beta of 1.66 makes the stock vulnerable to sudden market downturns. The stock current trades at 28.3x PE, above its five-year average of 25.64x. Also, EADSY is trading within $2 of its 52-week high of $35.52 at levels not seen since January 2020. The ongoing parts shortage doesn’t help overcome its multi-year backlog. Read Planes, pizza and clothes for our full analysis.

European stocks have recovered since the war in Ukraine started. Can deliver planes for the next 8-9 years without another order. Has benefited from issues with Boeing. Downside is interference from French government.

Prefers to BA. New plane is the best one out there with the lowest cost and fuel efficiency. Cleaner story than BA. Huge backlog stalled by parts shortages. Production rates will increase next 2-3 years, which will drive earnings.

(A Top Pick Mar 24/21, Up 18%) Still bullish as Airbus is well-positioned to benefit from the recovery in air travel this year and beyond. They still benefit from an oligopoly with Boeing. Also, when Covid hit, the average age of airplanes in the industry hit all time highs, so planes were already old. The airlines look for fuel efficiency in new planes they buy (reducing carbon emission is a major driving), so this could be a key competitive advantage for Airbus.