How a New Iran Could Be Great News for The Boeing Comany and General Electric Company

After decades of hostility, talks between Iran and the United States are raising the possibility of redefining their relationship. Can Boeing and General Electric get an early start on restoring trade ties?

Mar 3, 2014 at 9:00PM

Since the the Iranian Revolution of 1979, U.S. companies have found themselves not welcome in Iran. Between the Iranian government's own rhetoric and myriad sanctions from the U.S. government, doing business in Iran has been a nightmare that most U.S. companies dare not even attempt. That era may be coming to an end.

Since reaching an interim nuclear deal with Iran in November, which went into effect on Jan. 20, the prospect of a full rapprochement with Iran has grown considerably. European businesses have sent delegations to Iran, at times drawing complaints from the Obama administration that they are jumping the gun. Despite this, U.S. companies are following their lead.

Flying the Iranian skies
Recently, it was revealed that both Boeing (NYSE:BA) and General Electric (NYSE:GE) have applied for export licenses to Iran. At the moment, those licenses are sought only for the shipment of parts for Iranian passenger jets.

Iran Air is a small and struggling airline by flag carrier standards. Its fleet is aging, mostly composed of old Boeing and Airbus (NASDAQOTH:EADSY) jets from the 1970s and 1980s, back when business was a bit easier to do. Even getting the equipment to keep those planes in operating condition has been an enormous struggle for the airline.

General Electric has couched its export efforts as a matter of safety, saying that jet parts are necessary to keep civilian aircraft safe to fly. They are even promising to donate the profits from any near-term deals with Iran to charity, in an attempt to placate the inevitable critics of such a deal.

The ultimate growth market
It may sound like simple charity, but it's not. Iran the pariah state may not need to purchase much in the way of civilian aerospace equipment, but an Iran that has restored ties with the international community would.

Not only is there the business of replacing those elderly jets, but Iran Air and others would be shopping for the makings of a modern passenger airline fleet for an oil-rich nation of nearly 80 million people. That's a lot of business for whoever can land it.

How big? At the Dubai Airshow in November, Iranian executives in attendance were openly talking about a "spending spree" as soon as sanctions were lifted, and officials have suggested between 250 and 400 passenger jets could eventually be ordered.

Getting those jet parts into Iran would be a huge goodwill gesture for the companies, and even if the sales themselves are of little to no impact to the bottom line, they could easily push the companies to the front of the line if and when those big orders come through.

By the numbers
Boeing and Airbus stand to gain the most from this. Boeing is reasonably priced at current levels, given its impressive return on equity numbers and comfortable levels of cash on hand.

Airbus, by contrast, feels a little riskier, with sub-5% profit margins making it awfully expensive at these levels. An Iran contract, if it materializes, could justify these prices, but I don't give it nearly the upside Boeing could enjoy from a big modernization campaign in Iran.

Its enormous size and diversity makes a potential deal with Iran much less of a game changer for General Electric; currently its shares are quite reasonably priced at around 13-14 times forward year earnings. GE also pays the best dividend of the bunch and doesn't feel like a serious gamble even if the Iran deal doesn't materialize.

6 more great growth stocks
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Jason Ditz has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers