Can Boeing Tag All-Time Highs?

With shares of Boeing (NYSE:BA) trading around $100, 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. The company operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support and Boeing Capital Corporation. It focuses primarily on engineering, information technology, research and development, test and evaluation, technology strategy development, environmental remediation management and intellectual property management. 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 witnessed an impressive move over the last few years. The stock is soaring higher and may potentially tag previous all-time high prices established in 2007. 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

26.96%

93%

90%

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

Put IV Skew

Call IV Skew

June Options

Flat

Average

July 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 very 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 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 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%

1.27%

-0.15%

2.77%

Boeing has seen mixed earnings and revenue figures over the last four quarters. From these figures, the markets have been generally 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), Northrop Grumman (NYSE:NOC), Spirit AeroSystems (NYSE:SPR), and sector?

Boeing

Lockheed Martin

Northrop Grumman

Spirit AeroSystems

Sector

Year-to-Date Return

33.19%

13.78%

21.90%

27.99%

25.44%

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

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Conclusion

Boeing provides essential aerospace technology and service to many large clients, including the United States Government. The stock has seen an impressive run in recent years and may be getting ready to test all-time high prices established in 2007. Over the last four quarters, earnings and revenue figures have been mixed, regardless, investors have generally been pleased. Relative to its peers and sector, Boeing has been a year-to-date performance leader. Look for Being to continue to OUTPERFORM.

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