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Whenever you see a man-made object flying, odds are that Boeing is behind it. From commercial aircraft to cargo planes and military projects, Boeing is one of the largest companies in the world and a leading voice in the aerospace industry. Plus, the Everett plant is the largest factory in the world. Boeing, from all appearances, is a massive, thriving operation that seemingly will never stop.
A true giant of the industry, Boeing has been in aerospace for over a century. A recent crisis significantly weakened this sector, yet, vigilant investors will find an opportunity there.
How to Buy BA Stock Summary
Are you looking to invest in the recovery of aerospace? This guide will show you how to buy stocks, including BA.
- Pick a brokerage.
Investing in stocks is most convenient through a brokerage — a regulated financial company that buys and sells shares on your behalf. Although this used to be a slow, phone-operated process in the past, now it is much faster. You can do it from anywhere — by phone, app or through a web platform.
If you are a first-time investor buying Boeing, you need an account at a brokerage with access to the New York Stock Exchange (NYSE). You can pick one from our list of best brokers. - Decide how many shares you want.
The number of shares you want to buy will depend on the amount of capital you are planning to invest and the current price of BA. The stock currently trades at $250. Since that is a rather high dollar amount, you might consider using a broker that allows fraction share ownership. That will allow you to invest smaller sums without worrying about a single share price.
- Choose your order type.
Before investing you need to be familiar with the basic terminology. Try them out on your broker’s demo platform.
Bid: The highest price that a buyer is willing to pay for a share
Ask: The lowest price that a seller is willing to sell a share for
Spread: The difference between the bid and the ask. For example, if the bid for BA is $244.90 and the ask is $245.30, then the spread is $0.4.
Market order: A simple order that instructs your broker to buy the next available shares as soon as possible
Limit order: An order to buy (or sell) a stock at a specific order or better. For example, if you want to buy shares of BA for no more than $240, your limit order will only execute if BA stock is at $240 or lower. - Execute your trade.
Once you are familiar with the broker’s platform and have decided how many BA stocks you want to buy, you are ready to place an order. The broker will deduct the funds from your account and buy the shares on your behalf. You should keep track of the broker’s statements for all the details.
Best Online Stock Brokers
Boeing Stock History
The Boeing Company started as Aero Products Company in Seattle, Washington, in 1916. Its founder, William E. Boeing, built the 1st plane, Boeing Model 1 in June 1916.
Over the decades, it rose to one of the largest global aerospace manufacturers and the 2nd-largest defense contractor in the world. It is also the largest exporter in the U.S.
Currently, the company consists of 3 business units:
- Commercial Airplanes
- Defense, Space & Security
- Boeing Global Services
Finances are handled through a subsidiary, Boeing Capital Corporation.
Currently headquartered in Chicago, Illinois, the company has 141,000 employees and a market cap of $142.6 billion.
Screenshot from Benzinga Pro on 3/29/2021
After making a new high, the price pulled back but rejected from support at $235. That is also a 50% Fibonacci level. The next strong support is the 50-day moving average at $222. On the upside, current resistance is at $280, while the major psychological resistance waits at $300.
BA Restrictions for Retail Investors
Publicly-listed companies can issue up to 5% of their share capital while bypassing retail investors. During the COVID-19 crisis, in some instances, this was up to 20%.
Although Boeing took on a lot of debt, CEO Dave Calhoun is refusing to do an equity raise. For retail investors, this means there is no short-term dilution risk or restriction in the share offering participation.
Pros to Buying BA
- Return of 737 MAX: After months of extensive investigations, 737 MAX is cleared to fly. After 2 deadly crashes, over 50 countries had 790 aircraft out of use. Combined with the ongoing pandemic, the result was the removal of 1,000 planes from the backlog. But, the Federal Aviation Administration gave the green light in November 2020. Since then the demand has been on the rise, including 25 new orders from United Airlines and new interest from Southern Airlines. Now for over 1 year, sales are outpacing cancellations.
- Government contracts: It is no secret that Boeing is one of the largest aerospace and defense contractors. Between the Boeing Defense Systems and Boeing Global Service business segments, this accounted for over 30% of the total revenue. In 2019, Boeing took 2nd place with $23.4 billion worth of government contracts. The latest reports show $1 billion in new contracts for air and missile defense in 2021.
- Industry outperformer: Despite the negative fundamental developments, the company keeps outperforming the sector. While U.S. Aerospace & Defense returned 12% in the last 12 months, Boeing did much better at 50%.
- Strong foreseeable demand: With the worst of the pandemic behind, air travel is slowly coming back. Given the cyclical nature of the sector and the aging fleet of aircraft around the globe, expect the demand to rise in the coming years. Historically, Boeing has been ahead in launching aircraft programs and has a significant market share in the sector.
Average age of the global operating aircraft fleet from 2020 to 2030, Source: Statista
Cons to Buying BA
- Damaged reputation and cultural issues: Problems with the COVID-19 pandemic and 737 MAX might be just the tip of the iceberg. Leaked internal correspondence and accusations of planned deception of the regulators show that something is rotten in the state of Illinois. Former employees point out that the cultural shift started after the McDonnell Douglas reverse takeover in 1997, gradually worsening in the last decade. An emphasis on profits over safety caused problems already in the development of the 787 Dreamliner. It was 3 years late and billions of dollars over the budget. According to Max Ewbank, an engineer who worked on 737 MAX, Boeing rejected his safety upgrades because of the focus on schedule and cost considerations.
- Losses, debt and tariffs: Boeing currently has $63.4 billion of debt — about $44 billion of that from the 2020 crisis, with the $13.8 billion due in February 2022. With the 2020 loss being $11.9 billion, it is safe to say that the next few years will be under financial pressure. Furthermore, as of November 2020, Boeing is subject to 15% tariffs on aircraft delivered to the EU. With European deliveries averaging 20% (over the last decade), this puts an extra strain on the industry.
- Production delays: After the 737 MAX fiasco, the company is facing scrutiny with other products. Boeing now expects the 777X (a larger version of the 777) to enter service by late 2023 — 3 years later than planned and with a longer, more expensive certification project. The cost of the delay is $6.5 billion.
- Competition: Yes, there are other aircraft manufacturers like Embraer or Airbus, and these companies are directly competing with Boeing for business all the time. That short flight you took from Detroit to Chicago was likely on a smaller Embraer jet. Airbus builds jets almost exactly like those built by Boeing, which are flown on the same routes as similar Boeing aircraft. Embraer also builds turboprops that help take up marketshare, while Airbus manufactures massive cargo jets who are becoming more and more popular.
- High volatility: With a 5-year monthly beta of 1.63, Boeing is an above-average volatile stock. Although not an intrinsically negative measure — buyers should be ready to endure long drawdowns.
Still Not Out of the Turbulence
Despite all the problems in the last few years, Boeing remains a resilient company. It is so entrenched in the public sector operations that it is proving to be too big to fail.
The key for Boeing is in solving the cultural issues and returning to the old path of excellence. In that case, it could be one of the most promising turnaround stories.
Frequently Asked Questions
Who is Boeing owned by?
The largest owner is The Boeing Company Employee Savings Plans Master Trust with 8.49%. Other top holders include The Vanguard Group (7.04%), BlackRock (5.35%) and State Street Global Advisors (4.43%).
Why do all Boeing's start with 7?
During the 1940s, Boeing used 300s and 400s for military aircraft, 500s for turbine engines, 600s for rockets and missiles, and 700s were set aside for jet transport aircraft. Eventually, it was decided to use all model numbers beginning or ending with a 7 for commercial jets.
Related content: How to Buy United Airlines (UAL) Stock
About Stjepan Kalinic
Forex, Equity Analysis, and Financial Education