Jim Cramer’s Game Plan: 23 Stocks to Watch

19. The Boeing Company (NYSE:BA)

Number of Hedge Fund Holders: 42

Cramer expressed shock over how The Boeing Company (NYSE:BA) stock still gets bought despite its inefficient management. Here’s what he had to say:

“Here’s a shocker. No matter how poorly Boeing is run, and it’s become the benchmark for bad management, the big institutions are possibly Pavlovian about buying the stock. They can’t get enough of it. Boeing has to hope that the buyers can maintain their appetite through an already miserable pre-announced quarter because it needs to sell about $25 billion in stock to fix its balance sheet. And I’m betting that deal could come very, very quickly, maybe even the day the company reports. If you really want to own Boeing, save your powder until after the secondary offering, as it’ll most likely come at a nice discount.”

The Boeing Company (NYSE:BA) focuses on the design and manufacture of a range of products, including commercial jetliners, military aircraft, and satellites. The company has faced significant challenges for a while now. Recently, the machinist union has demanded a substantial 40% wage increase over four years, along with the reinstatement of a defined benefit retirement pension.

In response, the company reached a tentative agreement with the International Association of Machinists and Aerospace Workers, which offers a 35% general wage increase over the same period, a 4% annual bonus, and improved 401(k) matching, along with a $7,000 ratification bonus and enhancements to pension plans. This deal is crucial, as it is set to be voted on by union members on October 23, following a five-week strike that has halted production and created uncertainty for the company’s operations.

Amid these labor negotiations, The Boeing Company (NYSE:BA) grapples with financial pressures, facing over $50 billion in debt against just over $10 billion in cash reserves. Even if the company finalizes the agreement with the union, the expected increase in labor costs could further strain its finances.

Additionally, The Wall Street Journal reported on Sunday that Boeing may consider selling underperforming assets to bolster its cash position. Recent board meetings in Arlington, Virginia, have involved scrutinizing the performance of various divisions to address the ongoing crises.

In a recent move to generate funds, the company announced the sale of Digital Receiver Technology, a company specializing in wireless equipment for intelligence services, to Thales Defense & Security, a branch of Thales SA, a leading European defense electronics firm. The company has also expressed it could potentially raise up to $25 billion through a mix of stock and debt offerings, as its investment-grade credit rating faces challenges due to production delays, safety concerns, and ongoing labor strikes.