This Dow Stock Could Climb a Lot Further From Here

Stocks fell further on Thursday, with investors weighing their longer-term views on what the Federal Reserve's course of future policy actions could mean for the economy and their investments. The Dow Jones Industrial Average (^DJI 0.25%) held up better than the S&P 500 (^GSPC 1.18%) and Nasdaq Composite (^IXIC 1.96%), but all three were lower at the closing bell.

Data source: Yahoo! Finance.

Even though the Dow performed relatively well compared to other indexes, there were still many components of the index that fared poorly. Yet helping to offset those losses was Boeing (BA 0.65%), which posted its second consecutive day of sizable gains.

Here's what sent the aerospace and defense giant's stock higher and whether it could mark the beginning of a longer-term recovery for the ailing company.

Touting its business to investors

Boeing gained altitude following its investor conference early Wednesday. The aerospace stock was one of just three Dow components to rise in the aftermath of the Fed's decision to maintain an aggressive stance in tightening monetary policy, and Boeing was the only stock to see particularly noteworthy advances, climbing 3% Wednesday and another 6% Thursday.

The presentation reminded investors of just how big an opportunity Boeing has in both the commercial and defense arena. Even excluding Russia, Boeing sees a $3.5 trillion market in commercial aircraft over the next 10 years, split nearly evenly between single-aisle and wide-body planes. Government and commercial services represent another $3.3 trillion market between now and 2031, and the combination of defense, space, and security business opportunities chips in another $2.8 trillion, totaling up to $9.7 trillion overall.

Admittedly, Boeing has faced an existential threat because of the one-two combination punch of the grounding of the 737 MAX and the COVID-19 pandemic. However, the company now expects that its free cash flow will come in positive at between $1.5 billion and $2 billion in 2022, and it expects to recover further to see around $10 billion in annual positive cash flow by 2025 or 2026.

There's a long list of caveats there, as Boeing will have to work down its 737 and 787 inventories and get its supply chain issues resolved while keeping production rates at healthy levels. But looking beyond 2026, Boeing even expects to start returning cash to investors through dividends or stock repurchases -- a key sign of getting back to a more normal strategic course.

More products on the way

At the same time, Boeing knows it has to keep innovating. It plans to dominate the long-haul market with its 777X aircraft, which offer two options: to seat between 400 and 450 passengers or carry 100 to 120 metric tons of freight.

Meanwhile, the increasingly volatile geopolitical environment could breathe new life into Boeing's defense programs. Between fighter jets, space and missile defense programs, rotor-based vertical lift aircraft, and military cargo planes, Boeing anticipates margin improvement to contribute significantly to cash flow in the coming years.

A lot of room to rebound

With today's gains, Boeing has now bounced about 40% from its lows from earlier this year. Yet, its all-time highs from 2019 are still close to triple the current share price. If Boeing can indeed mount this amazing recovery, shareholders can argue that they deserve to claw a lot of that lost ground back.