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Where Boeing's Future Growth Will Come From

By Daniel Miller – Feb 13, 2014 at 3:00PM

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Boeing had a strong 2013, and things don't look likely to slow down.

The Dow Jones Industrial Average (^DJI 2.18%) is trying to close above 16,000 for the first time in three weeks despite slightly negative economic data. Retail sales fell 0.4% in January from the previous month which was more than economists had expected. Much of the decline was due to a weak month for automotive sales. In other economic news, initial U.S. unemployment claims rose last week by a larger than expected 8,000, to 339,000. Here are a few companies making headlines in the market today.

Boeing (BA 2.03%) was easily one of the Dow's best-performing components last year, but the company is likely to face downward pressure on its commercial airplane margins as production of the 787 Dreamliner has ramped up to 10 airplanes per month. Fortunately, for long-term investors, the future looks very bright for Boeing's largest business segment as its 20-year forecast values global commercial airplane demand at $4.8 trillion. A big chunk of that comes from the Asia-Pacific region, which Boeing predicts will need an additional 12,820 jets, valued at $1.9 trillion, over the two-decade span.

"Over the next 20 years, nearly half of the world's air traffic growth will be driven by travel to, from or within the region." Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes, said to reporters Monday ahead of the Singapore Airshow, according to Reuters. "The Asia Pacific fleet will nearly triple, from 5,090 airplanes in 2012 to 14,750 airplanes in 2032, to support the increased demand."

This projected growth is good for potential investors eyeing the recent pullback in Boeing's stock price and helps offset worries that the company's defense business will drag down earnings.

Tesla's popular Model S electric vehicle. Source: Tesla Motors.

In other manufacturing news, Tesla Motors (TSLA 7.67%) is set to report quarterly earnings next week and investors will be focusing on shipments of its successful Model S. Tesla announced that it expects shipments to beat last quarter's guidance by as much as 20%, which could bring the figure up to nearly 6,900 for the quarter.

In addition to the shipments figure, investors will also be focusing on the company's non-generally accepted accounting principles vehicle gross margin. Management has expressed confidence in its ability to achieve 25% without help from zero-emission-vehicle credits.

Another thing I'll personally be looking for during Tesla's quarterly report is details on its battery factory. This will likely be a big factor for the stock price going forward as Tesla's third-generation car, a more affordable passenger vehicle, will rely on a higher availability of batteries. The speed at which Tesla can bring its third-generation car to market might hinge on the execution of the battery factory. Look for Tesla to perhaps give us more details on the timeline and partners for factory construction in the U.S.

Daniel Miller has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. 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.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$34,589.77 (2.18%) $737.24
Boeing Stock Quote
$178.88 (2.03%) $3.56
Tesla Stock Quote
$194.70 (7.67%) $13.87

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