Can Boeing Reach All-Time Highs?

With shares of Boeing (NYSE:BA) trading around $103, is BA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Boeing is an aerospace company. It focuses primarily on engineering, information technology, research and development, test and evaluation, technology strategy development, environmental remediation management and intellectual property management. The company operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital Corporation. As a leading provider of aerospace products and services to large corporations, including the United States Government, look for Boeing to continue to advance and develop this space and fuel aerial progress.

T = Technicals on the Stock Chart are Strong

Boeing stock has seen a very powerful surge higher over the last several years. The stock is set to test previous all-time high prices so it may need time to battle out these prices. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Boeing is trading above its rising key averages which signal neutral to bullish price action in the near-term.

BA

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(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Boeing options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Boeing Options

23.98%

40%

39%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

July Options

Flat

Average

August Options

Flat

Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Boeing’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Boeing look like and more importantly, how did the markets like these numbers?

2013 Q1

2012 Q4

2012 Q3

2012 Q2

Earnings Growth (Y-O-Y)

18.03%

-30.91%

-7.53%

1.60%

Revenue Growth (Y-O-Y)

-2.53%

14.05%

12.87%

20.93%

Earnings Reaction

3.00%

1.27%

-0.15%

2.77%

Boeing has seen improving earnings and revenue figures over the last four quarters. From these numbers, the markets have generally been happy about Boeing’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Boeing stock done relative to its peers, Lockheed Martin (NYSE:LMT), Spirit Aerosystems (NYSE:SPR), Northrop Grumman (NYSE:NOC), and sector?

Boeing

Lockheed Martin

Spirit Aerosystems

Northrop Grumman

Sector

Year-to-Date Return

37.28%

18.03%

27.64%

24.37%

23.96%

Boeing has been a relative performance leader, year-to-date.

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Conclusion

Boeing is an aerospace company that provides companies and Governments worldwide with constantly improving aerial technology. The stock has seen a strong move in recent years and is now getting ready to test previous all-time high prices. Over the last four quarters, earnings and revenue figures have shown signs of progress which have kept investors in the company generally happy. Relative to its peers and sector, Boeing has been a year-to-date performance leader. Look for Boeing to continue to OUTPERFORM.

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