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A Look at the Best Performing Dow Component of 2013: Boeing

By Matt Thalman – Dec 25, 2013 at 8:00PM

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A look back at the plane-maker's year.

Now that we only have four trading sessions remaining in 2013 and shares of aircraft manufacturer Boeing (BA 2.03%) are up more than 81% year to date, with the next best performing Dow Jones Industrial Average (^DJI) component, American Express, up "only" 53%, I think it's safe to award Boeing the title of "Top Stock of 2013" on the blue-chip index.

I recently highlighted IBM, the Dow's worst performing component of 2013, which is currently down 4% year to date. IBM's problems and Boeing's success seem to be the opposite of each other: While IBM failed to innovate and change, that's all Boeing seemed to do this year.

Boeing rolled out hot new products that its customers seemed to find irresistible -- from the 787 Dreamliner with its lighter weight body and battery-powered mechanical parts to help reduce weight and fuel costs, to the 737 Max, to the 777X, which is expected to be the most fuel-efficient plane ever built and not even scheduled to be delivered until 2020. The company just couldn't stop selling airplanes.  

Investing is all about being able to accurately predict a company's revenues and earnings down the road, and investors who are good at it do pretty well for themselves. When a company pre-sells items, those predictions become less of a guess and more of just figuring out when the products will be delivered. That's where Boeing sits, with a current backlog of $415.1 billion in plane sales and with those aircraft slated to be delivered years into the future. The only guess becomes whether Boeing will be able to keep up with its scheduled delivery dates.

Furthermore, only $70 billion of Boeing's backlog comes from the defense and aerospace industries, while $345 billion lies with the 4,800 commercial aircraft the company needs to make. That mix, combined with its other revenue streams, helped Boeing weather the government shutdown rather unharmed this year, while its peers struggled a bit more.

But the most impressive thing about Boeing in 2013 was that it managed to do well even in spite of the problems it had with its 787 Dreamliner. The plane made plenty of headlines with its batteries that caught fire,  but once the regulators approved a solution and confirmed that the 787 was safe to fly, it seemed that was the sign investors wanted to see. The next generation of aircraft had finally arrived, and Boeing's shares flew higher and never looked back.

Moving forward, investors should continue to be optimistic about Boeing's prospects, but they shouldn't expect a repeat performance of 2013. Now that the risk associated with the Dreamliner isn't hanging over the company going into 2014, the stock will have one less catalyst helping it move higher. But shares could experience a similar pop in 2020, when the 777Xs are first delivered. Stay tuned, long-term investors.

Fool contributor Matt Thalman has no position in any stocks mentioned. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513.

The Motley Fool recommends American Express and owns shares of IBM. We Fools don't 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.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,852.53 (%)
Boeing Stock Quote
$178.88 (2.03%) $3.56

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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