Military

Boeing Flies High as DJIA's Top Stock for 2017

Paul Ausick

Published: December 30, 2017 9:10 am

Last Updated: January 12, 2020 4:59 am

There’s been no contest for months. Boeing Co. (NYSE: BA) took the top spot from Apple Inc. (NASDAQ: AAPL) in June and has never looked back. Since then, the Boeing juggernaut has added nearly $100 to its share price and closes the year as the best performing stock among the 30 stocks that make up the Dow Jones Industrial Average (DJIA).

As of Friday’s close, Boeing stock is up 89.4% for the full year. Shares dipped by a fraction last week, but so what? The aerospace giant’s nearest rival was Caterpillar Inc. (NYSE: CAT), which rose by 1.9% last week to a put up a yearly gain of 69.9%. Visa Inc. (NYSE: V) edged out Apple for third with a gain of 46.14% for the year to Apple’s 46.11% gain. Rounding out the top five was Wal-Mart Stores Inc. (NYSE: WMT), up 42.89% for the year.

As of December 19, the company reported 844 net new orders for the year, well above the 760 to 765 new aircraft it planned to deliver in 2017. Arch-rival Airbus last week confirmed an order for 430 new jets, but even with that Airbus has written just 705 net new orders this year.

Boeing’s market cap at Friday’s closing price is $175.6 billion, to add the distinction of being the largest industrial company in the United States to its annual accomplishments. General Electric Co. (NYSE: GE), the former number one, has dropped nearly 45% of its market value this year to hand over the title without any kind of struggle.

For 2018, only a hopeless Pollyanna would expect Boeing to duplicate its 2017 performance. The company’s forward price-earnings (P/E) ratio of 26.61 remains quite optimistic, but it is lower than the company’s trailing 12 month P/E of 27.13.

As for what’s on Boeing’s plate for the year ahead, the recently revealed discussions with Brazil’s Embraer S.A. (NYSE: ERJ) is the most interesting and potentially important. The talks could come to a close with some sort of alliance between the two companies but almost certainly no acquisition by Boeing. As industry analyst Richard Aboulafia has written, “Boeing buying Embraer would be akin to buying an aquarium stocked with piranhas. Mounted over a fire ant colony. Under a hive of Killer Bees.”

But an alliance or joint venture makes a lot of sense for both companies. Embraer’s commercial product line does not overlap at all with any Boeing jet. For Embraer, a tie-up with Boeing brings scale. But Aboulafia lists some solid reasons for Boeing to walk away.

Boeing stock closed at $294.91 on Friday, down about 0.5% on the day, in a 52-week range of $154.96 to $299.33. Week over week the shares dipped by 19 cents. The 12-month consensus price target is $291.52 with the low price target at $203 and the high at $350.

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