As an investor and a longtime follower of the airline industry, aerospace giant Boeing 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.
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.
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The article Why I'm Betting on Boeing originally appeared on Fool.com.
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 .
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
