After cresting a new 52-week high yesterday, Boeing
I'm sorry. Was that too harsh? Well, consider: According to The Wall Street Journal, across the length and breadth of the country, industrial output was up. From Eaton
Now don't you feel ashamed, Boeing? It's all your fault.
Or is this just one of those cases of lies, damned lies, and government statistics? Because the way I read Boeing's Q1 earnings report, things are actually going pretty great at Boeing. Like industrial peer United Technologies
Proving the old saw about cyclical investing, no sooner had Boeing's stock hit the nosebleed P/E of 40 than out came management with a promise of up to $3.80 in earnings this year -- which would drop the P/E right back down to 20. The question facing investors today is: Is there still time to board? Has Boeing reached peak altitude, or can it climb further?
I'd love to be able to tell you that Boeing's best stays still lie ahead of it -- but I'm skeptical, at least, concerning the stock. You see, with $315 billion in backlog, Boeing does have a bright future. Problem is, crunching the numbers in the bright light of that figure, most analysts still don't see Boeing growing much faster than 8% over the next five years. And I don't have to tell you that a price-to-earnings ratio of 20 is quite a high price to pay for an 8% grower.
And did you notice how Boeing's cash burn accelerated last quarter, and how the company predicted it will burn through nearly $2 billion in free cash flow this year? Hardly encouraging numbers.
When you put it all together, I'm forced to conclude: No, Boeing's not the villain in this week's Commerce Department report. But the stock's also no longer the bargain it once was. It's time for investors to seek their profits elsewhere.
Boeing's stock has more than doubled over the past year. How do you know when the train has left the station and it's too late to buy? Here's how. And where should you look to find other outperformers ... before they prove themselves? Here's where.