Friday, November 29, 2013

Is Boeing Ready to Continue It’s Bull Run?

With shares of Boeing (NYSE:BA) trading around $132, 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 Corp.

Boeing is working with the Washington government and labor unions to decide whether the production of its 777 jet will take place in the state or not. The state has offered Boeing a $8.7 billion package of incentives, including tax breaks and workforce support, according to the Wall Street Journal, in an attempt to convince Boeing to keep production of the jets local. Boeing's labor unions, however, are reportedly unhappy about the contract offered to them. Boeing said that if the unions don't approve the contract by Wednesday, the company will start considering other venues for the 777′s production.

T = Technicals on the Stock Chart Are Strong

Boeing stock has been surging higher in recent quarters. The stock is currently trading near all time high prices and looks like it may need time to consolidate before heading higher. 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.


(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




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

December Options



January Options



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 smallt 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 Q3

2013 Q2

2013 Q1

2012 Q4

Earnings Growth (Y-O-Y)





Revenue Growth (Y-O-Y)





Earnings Reaction





Boeing has seen increasing earnings and revenue figures over the last four quarters. From these numbers, 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?


Lockheed Martin

Sprint Aerosystems

Northrop Grumman


Year-to-Date Return






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


Boeing is an aerospace company and provider of aircrafts and related products and services to corporations and governments worldwide. The company is working with the Washington government and labor unions to decide whether the production of its 777 jet will take place in the state or not. The stock has been surging higher and is now trading near all time high prices. Over the last four quarters, earnings and revenue figures have increased, leaving investors happy. Relative to its peers and sector, Boeing has been a year-to-date performance leader. Look for Boeing to OUTPERFORM.

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