The Boeing Company (NYSE:BA)

I doubt airlines have cash for new planes right now

Duopoly Pick: 10% allocation limit would be wise

As you search through the wreckage left by the ongoing pandemic, don't make the mistake of overlooking this aerospace juggernaut. If I learned anything investing in stock over the years it is this: don't mock the Fool and don't bet against Boeing. Odds are you will lose in the long run.

Hammered by the 737 max disasters in more ways than one, only to be repeatedly kicked while down during the pandemic - Boeing is definitely in a bad spot. Commercial sales make up 85% of her revenue, or at least did before 2020. The 6000 back orders she once enjoyed have been slowly dwindling down to the low 5000's with more cancellations on the way. Total liabilities exceeded total revenue in 2019 and debt has grown to $61B in the second quarther. At least one major airline is likely to go bankrupt if COVID continues its wreckage upon the industry, and her most popular bird is still grounded by the FAA. To say things are bad for Boeing is an understatement.

However, Boeing is still in a duopoly with Airbus for large passenger jets of all sizes and even though Boeing failed miserably with software augmentations to the 737 max, Airbus made similar errors. The main difference being that Airbus' errors were discovered during a Lufthansa flight at altitude over Germany. The pilots had time to recovery from the dramatic dive without crashing and Airbus was able to quietly fix the issue without harsh scrutiny.

Boeing has over 400 737 max birds sitting on the tarmac waiting for delivery representing roughly $40B in assets ready to go. She only needs 1/10th of her 2019 back order to wipe out her debt (~600 birds). With her current backlog of just over 5000 jets, she's looking at 1/2 $T dollars in orders on the commercial side alone. FAA flight testing is complete and the bird's certification is currently under review.

This pandemic will not last forever and Boeing's birds will be in high demand again. I predict that Boeing will double the SP500's annual return within three years.