Headquartered in Chicago, Illinois, Boeing is one of the world’s leading aerospace companies that is involved in designing and manufacturing commercial and military aircraft.
The company also manufactures satellites, defence systems, launch vehicles, and provides various support services such as performance-based logistics to the commercial airline industry, NASA and the US military.
In 1916, Boeing was founded by William Boeing, a former timber merchant. Shortly afterwards, Boeing began selling speedboats to the US Navy, resulting in a business relationship with the US government that still stands to this day.
Boeing held its IPO on the New York Stock Exchange (NYSE) on the 13th of January 1978, where it is listed and trades under the ticker symbol BA.
The stock falls into the Aerospace sector, under the Aerospace and Defence General category. The stock is also part of the Dow Jones Industrial Average index.
Despite its wide portfolio, Boeing’s most successful products have been commercial aircraft, and more particularly, the narrow-body 737 family that was the first commercial jetliner to cross the 100,000-order mark, a feat it achieved in 2012.
Another successful product for the company has been the 777 aircraft that was first flown in 1995 by United Airlines and has grown to cement Boeing’s dominant position in the wide-body aircraft segment.
Over the years, Boeing’s dominance in its sector has been achieved by strategic mergers and acquisitions. The major deals include McDonnell Douglas Corporation, Rocketdyne, Piasecki Helicopter, Hughes Satellite Electronics, Rockwell Aerospace International, Aviall Inc., Jeppesen Sanderson Inc., Argon ST Inc., North American Aviation, and KLX Aerospace Solutions.
Since going public in 1978, Boeing has had 6 stock splits as follows: 3-for-2 on the 12th of March 1979; 3-for-2 on the 14th of March 1980; 3-for-2 on the 10th of May 1985; 3-for-2 on the 12th of May 1989; 3-for-2 on the 18th of May 1990; and 2-for-1 on the 16th of May 1997.
Boeing’s split strategy has always varied, but for the most part, it involved splitting as soon as the share price topped three digits.
Boeing investors have always had a bumpy ride, with Wall Street touting it as the classic ‘buy the dip’ stock. In 1990, the stock topped out at $31 a share and subsequently plunged into a multi-year downtrend that found support in 1993.
It turned higher strongly, finding resistance at circa $60 a share as the effects of the Asian financial crisis started to trickle down in 1997. A dip to circa $40 got bought again, but the subsequent uptrend failed to break the 2001 resistance at $66 a share.
In 2003, selling pressure pushed the stock lower to a multiyear low of $25 per share, which welcomed the ensuing advance that drove the stock to $108 in 2007.
The 2008 global financial crisis triggered a tumble that only found support in 2009 at around $32 a share. Since then, Boeing stock has been flying to greater heights.
It broke through the psychological $100 barrier in 2013, and the oil price crash of 2014-15 only propelled it higher to 2018 all-time highs of $368, that valued the company at over $210 billion.
Despite swings in its stock price, Boeing has been a regular dividend payer. Since the turn of the millennium, Boeing has paid out incremental quarterly dividends from $0.14 a share in 2000 to a peak of $1.72 a share in 2018.
The lowest dividend yield was 0.5% in 2011, while the highest so far as of 2018, was 3.7% in the first quarter of 2016. As a consistent dividend payer and high-value stock, Boeing will likely remain high on the priority list of many investors.
As one of the most followed and traded stocks in the world, Boeing has unique dynamics that every investor should be aware of. Here are some of the factors to consider when trading Boeing stock:
Boeing products are highly priced, and their customers almost always finance all their purchases from the company. Boeing also operates a unique business model that entirely involves pre-orders. While this guarantees income, it also means that changes to tariffs and trade agreements can lead to the cancellation of orders or even a reduction in profit margins.
Boeing has a successful model of servicing fixed-price contracts, and in most cases, it enjoys a backlog of orders that require a minimum of 5 years to service. It is still important to analyse the new products it releases because if they fail to become a hit, it would mean huge cost overruns for the company. Also due to the high costs of their products, there are very long sales cycles and customers may not easily be convinced to make purchases.
As seen with the stock history, Boeing is highly exposed to the economic cycle. It is precisely why it has earned the title ‘buy the dip stock’. It is import to assess the cycles of boom and bust, and then implement the appropriate trading strategy in the prevailing market conditions.
Boeing’s fiscal year runs from January to December, and the company releases quarterly earnings reports to keep shareholders up to date on its performance. It is important to track and scrutinise these reports thoroughly because unlike most companies, Boeing’s performance is typically assessed on it filling existing orders. But as an investor, it is prudent to look beyond the competence of executing existing contracts and further examine whether new revenue streams or future income growth, are plausible.
As a CFD trader, it is important to assess these factors for their short to medium term impact. This will allow one to pick out high probability trade opportunities, as opposed to examining long-term potential price behaviour where the risk is that all factors have been discounted at the prevailing price.
MT4 Symbol: #BOEING
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