Boeings rival Airbus seems to have blown it with the A380 – it’s just too darn big for US airports without some major restructuring that they just don’t have time to do, even if they did want to spend the money.
The A380, while seeming very cool, is a gas guzzler and you just know it would only be a quarter or two before airlines take out the casino and the bowling alley and the lounge area to add another 500 seats (imagine the bathroom lines!).
Boeing scored 2 major air show victories in a row and the stock has been on fire. This is another one of those “You’ve got to put your past behind you” kind of stocks that is really is undervalued due to prior disappointments.
The PEG ratio on this stock is .4, you can hardly find a penny stock with that kind of value (and I think the growth estimates of 13% may be a little low)!
Aside from the planes we all know and love, they are also making the coolest little unmanned drones for the army that the Democrats love to use in “Police Actions” and I think it is pretty likely that we will either have a Democratic Government in 3 years or at least a more Democratish Republican (no, not Cheney).
Props to Cramer for pounding the drum all year but I prefer to come in for the quick kills and I think now is the time. I will not make this trade if the DOW (yes, the stupid Dow) continues down but I expect both it and component BA to be well up on Monday.
I’m going to take a spread on this stock like the one that worked on Google (but for a lot less money) in anticipation of earnings and, more importantly, raised guidance.
The stock should be up tomorrow due to some Cramer pumping so I will start with the Feb $75 call for $1 and I will look to exit if it doubles. I will also offer $1 for the Feb $65 put (a 30% discount) also looking for a double.
If we exit either prior to earnings we will have to decide what to do with the other half of the trade. The safest thing to do would be to take the .35-.60 that remains on the other side and call it a profit of 15-30% but it may be possible that we are oversold or overbought and it may pay to leave it open with a free gamble.
If we hit either target we can also sell off 75% of both positions to maintain the same spread into earnings with free options – but remember, they are not really free when you forego a 20% profit to hold them!
In a perfect world I would just buy the Jan ’08 60s for $17 and sell off calls like the January ’06 $75s for .50 for 24 straight months, but I am very conservative with this great stock because of what happened on 9/11 when the stock lost almost 1/2 its value in a week. It is a shame we have to worry about this but it is also a very real fact of life…
