As an investor and a longtime follower of the airline industry, aerospace giant Boeing (NYSE:BA) has been on my radar as an investment idea for years. However, Boeing struggled through the introduction -- and subsequent grounding -- of its 787 Dreamliner, and as a result, I was never comfortable enough to pull the trigger.

Last week, I changed my mind and bought shares of Boeing. The Dreamliner's early production and safety issues finally seem to be receding, and the boom in commercial aircraft demand shows no signs of slowing. Boeing's strong financial performance and reasonable valuation finally became too enticing to pass up.

The two keys to Boeing's evolving business

The last few years have been extremely eventful for Boeing. There have been two overarching themes. The first has been a shift toward commercial aircraft production and away from military contracts.

As recently as 2010, Boeing's Defense, Space & Security business unit generated slightly more revenue than the Commercial Airplanes division. However, revenue has declined slightly at BDS since then, primarily because of cutbacks in U.S. military spending.

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Strong demand for fuel-efficient planes like the Dreamliner has boosted Boeing's commercial aircraft sales. Source: Boeing.

Meanwhile, revenue has soared at the Commercial Airplanes unit as Dreamliner deliveries began and production rates increased across most of Boeing's commercial aircraft families. Today, the Commercial Airplanes division generates twice as much revenue as BDS.

The second key theme is the move to new aircraft models that use next-generation technologies to reduce fuel consumption. In 2010, Boeing was producing and selling airplanes based on designs from the 1980s and 1990s.

Since then, the Dreamliner has entered service, and its production rate has ramped up to 10 per month. Furthermore, Boeing has announced new versions of its popular 737 and 777 models, incorporating the latest engine technology as well as other enhancements.

Efficiency drives sales

The widespread demand for fuel-efficient aircraft has driven record orders for Boeing and its top rival, Airbus. Many airlines are eager to replace their current fleets in order to reduce fuel and maintenance costs. Boeing and Airbus are also benefiting from the rapid growth of budget airlines across much of the world, and the rise of big Middle Eastern hub-and-spoke carriers.

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Boeing has almost seven years of commercial aircraft production locked in.

In 2014, Boeing has won more than 1,000 aircraft orders, which represents nearly a year and a half of production at current rates. Boeing now has a backlog of more than 5,500 airplanes for the Commercial Airplanes division, worth $430 billion. That represents nearly seven years of production already locked in!

With demand continuing to outpace production capacity, Boeing is planning to boost output. Production of the 737 family will increase from 42 per month today to 47 per month in 2017, and 52 per month by 2018. 787 Dreamliner production will also rise from 10 per month today to 12 per month in 2016, and 14 per month by the end of the decade.

Not only will these production increases boost revenue, they will also improve Boeing's efficiency, driving long-term margin growth.

Strong financial performance

The ramp-up of 787 production and ongoing efficiency initiatives are already boosting Boeing's financial performance. Earlier this year, Boeing low-balled its earnings guidance, projecting core EPS (which excludes pension contributions) of $7.00-$7.20.

However, Boeing has raised its projections several times this year, and it now expects core EPS of $8.10-$8.30. On average, Wall Street analysts are expecting even higher earnings per share of $8.36.

Earnings growth may be lumpier going forward, depending on the timing of production increases, productivity improvements, and supplier cost cuts. Nevertheless, Boeing's strong order trends, big backlog, and planned production increases provide a clear roadmap for long-term earnings growth.

Furthermore, deferred production costs for the 787 Dreamliner -- cash losses due to production inefficiencies on early models -- are nearing a peak. Through the end of September, Boeing has absorbed more than $25 billion of cash losses related to launching the Dreamliner. As these losses are reversed over the next decade or so, Boeing's free cash flow will surge, allowing the company to boost its dividend and buyback program.

Boeing stock remains well below its early 2014 high, even though it is on pace to produce significantly higher earnings in 2014 than what most analysts had expected.

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Boeing 1-Year Stock Chart, data by YCharts.

Boeing trades for 15 times adjusted earnings, which makes it relatively cheap compared to many other industrial stocks. On the other hand, its massive production backlog makes it much less risky from an investment perspective than many other companies.

That's why I finally took the plunge and bought shares of Boeing last week. Planned production increases and gradual productivity improvements should lead to long-term earnings and cash flow growth. This gives Boeing stock a good chance to beat the market over the next 5-10 years.

Adam Levine-Weinberg owns shares of Boeing. The Motley Fool has no position in any of the stocks mentioned. 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.