Can Boeing Continue This Bullish Run?

With shares of Boeing (NYSE:BA) now trading around $104, 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.

On Saturday, Boeing’s 777 jet crashed in San Francisco, but luckily, the plane had several built-in safety features that helped save lives in the accident. One of the greatest features of the 777 jet is a flame-retardant cabin, and engineering that ensured the plane wouldn’t break up too much after the impact. For now, it doesn’t appear as though any mechanical failure caused the crash, which is good news for Boeing after the safety issues that have plagued the company’s other aircrafts this year. As a leading provider of aerospace products and services to large corporations, not to mention the U.S. 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 witnessed a very impressive move towards higher prices over the last few months. The stock is now trading near all-time high price levels, where the stock may pause a bit. 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

(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

24.75%

20%

17%

What does this mean? This means that investors or traders are buying a small 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 small 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 what this means for Boeing’s stock.

E = Earnings Are Mixed 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 can 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 mixed earnings and mostly rising revenue figures over the last four quarters. From these numbers, it seems the markets have been pleased with 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

39.23%

18.28%

32.00%

25.51%

27.56%

Well, it looks like Boeing has been a relative performance leader, year-to-date.

Conclusion

Boeing is an aerospace company that provides aircrafts and related products and services to corporations and governments worldwide. The stock has been on an explosive move higher that has taken it near previous all-time high prices. Over the last four quarters, earnings have been mixed while revenue figures have been mostly on the rise, maintaining investors’ satisfaction with the company. 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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