The Boeing Company (BA): This Company’s Stock Will Rise as High as its Products

A defensive competitor

One of Boeing’s biggest competitors is the security and aerospace company Lockheed Martin Corporation (NYSE:LMT). The company specializes in technology systems and products for defense, civil, and commercial uses that include fighter jets, missiles, and new coastal warships.

The company’s first-quarter earnings report was good with a 14% rise in net profit to $761 million and a 14.8% rise in earnings per share to $2.33. The company recently landed a $57 million contract with the U.S. Navy to upgrade the fleet’s electronic warfare defenses against anti-ship missile threats. It expects orders of up to 71 F-35 fighter jets from the U.S. and other foreign governments in the near future.

When compared to Boeing, Lockheed Martin Corporation (NYSE:LMT) seems to have slower growth with a PEG of 1.65 against Boeing’s 1.15. Lockheed also relies heavily on the government’s defense budget. The U.S. Department of Defense has been required to reduce spending by nearly $1 trillion over 9 years including $487 billion from the Budget Control Act of 2011 and $500 billion from the sequestration that began March of 2013.

Because Boeing has an already successful commercial business, the company can be more flexible with budget cuts than its competitor. Lockheed has an attractive dividend yield of 4.20% compared to Boeings 1.90%, but I still think Boeing is a better investment due to the demand of its products.

Conclusion

Boeing CEO James McNerney recently said, “[In the aerospace industry] Boeing is going to be the winner. Don’t bet against us.” I’m inclined to take his advice. Boeing handled the problems with the 787 well and continues innovation to improve air travel. With its massive backlog, good dividend, international growth potential, and the high demand for its products, I think the company is a definite buy. In the coming years, this stock to go as high as the planes Boeing sells.

Ben Popkin has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin.

The article This Company’s Stock Will Rise as High as its Products originally appeared on Fool.com and is written by Ben Popkin.

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