We came across a bullish thesis on The Boeing Company (BA) on Substack by DeepValue Capital by Kyler. In this article, we will summarize the bulls’ thesis on BA. The Boeing Company (BA)’s share was trading at $178.11 as of March 21st. BA’s forward P/E was 36.90 according to Yahoo Finance.
A Boeing 737 aircrafts parked in an airport terminal with passengers awaiting to board.
Boeing has faced significant turbulence in recent years, marked by major disasters, ongoing safety concerns, and operational inefficiencies. Despite these setbacks, the company remains a dominant force in the aerospace industry, operating within a strong duopoly alongside Airbus. With a massive backlog exceeding $500 billion, Boeing holds a firm position in both commercial and defense markets, ensuring long-term revenue visibility. The company is structured into three key segments: Commercial Airplanes, which supplies jets to airlines worldwide; Defense, Space & Security, which encompasses military aircraft, weapons systems, and surveillance technology; and Global Services, which focuses on logistics, maintenance, and aftermarket support. This diversified revenue stream provides resilience across economic cycles.
Currently, Boeing’s stock is down over 40% from its all-time highs and trades at only 1.3x peak revenue, offering an attractive valuation given its long-term fundamentals. Historically, Boeing has achieved superior margins and return on invested capital (ROIC) compared to Airbus, reinforcing its competitive advantage. The company’s new CEO, Kelly Ortberg, an experienced engineer and former head of Rockwell Collins, is expected to drive crucial operational and financial improvements. Boeing’s turnaround hinges on executing strategic changes to restore profitability, yet investor sentiment remains skeptical, creating an opportunity before the market fully re-rates the stock.
With catalysts already in place, including leadership changes and a renewed focus on efficiency, Boeing is positioned for a strong recovery. The path back to $10 billion or more in free cash flow (FCF) over the next few years could significantly revalue the stock, potentially commanding a 20x multiple. While not the highest-return opportunity in the market, Boeing presents a high-conviction investment with a compelling risk-reward profile.
The Boeing Company (BA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 103 hedge fund portfolios held BA at the end of the fourth quarter which was 52 in the previous quarter. While we acknowledge the risk and potential of BA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.