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Has Boeing Become a Buy?

The bad news for Boeing (BA) continues to come, with the latest news coming out of Japan where a Boeing 787 was forced to make an emergency landing. We have seen numerous problems with the 787 Dreamliner in recent days, including a fuel leak, a battery fire, brake problems and problems with the planes wiring.

Because of the number of Dreamliner jets operating in Japan, the move to ground the planes is major, and Boeing has a big opportunity to address the problems in Japan, and if it fails to restore confidence in Japan then it is going to really face some problems in the future.

About half of the all Dreamliner jets that are currently operating are located in Japan.

The Dreamliner is Boeing's flagship jet, so the situation is an urgent one. Realizing the severity of the situation, investors have been selling off the stock today, pushing it down 3.2% in today's trading.

The real question is whether or not we should view the recent stock action as a buying opportunity, or avoid the stock all together.

At the current time, I believe investors should avoid setting up any positions in the stock. I would not be buying shares until we see what sort of action Boeing takes to restore customer confidence in the planes. There are a lot of orders that are still being filed for the jets, and if we start to see major cancellations of that orders and customers instead turning to Airbus for their new planes then the stock is going to really take a beating.

 

For investors that already own the stock, I would suggest that you take a little profit off the table, but not rush to liquidate all together. The stock has been pretty strong in recent months, so most likely you are showing a profit, and there is nothing wrong with protecting some of those gains by selling part of your investment. I would not completely liquidate the shares because if Boeing is able to address the problems, and Japan clears the planes for flight, we could see the stock quickly make up all of its recent losses.

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.