Sunday, November 20, 2005

Boeing's Booming Business

Boeing (NYSE: BA) had a rather productive weekend. China placed an order to buy (70) 737 airliners for $4 billion and looks to purchase (80) more. Emirates Airlines bought (42) 777 airliners for $10 billion. I admit I have been a non-believer in Boeing and have shied away from their stock. I figure if your customers are filing for bankruptcy then it's probably is not a good business to be in. Plus US manufacturing labor costs are becoming more unfavorable everyday (See GM, Ford, Visteon). Clearly I took a simplistic approach because countries that can be considered "emerging markets" are buying lots of commercial aircraft. US domestic carries that are in bankruptcy need more efficient planes and receive generous financing. All of this is good news for Boeing shareholders.

In October I purchased shares of Titanium Metals (NYSE: TIE). TIE was up 323% YTD when I made my purchase. I am now up 36% since then. So buying high does work once in a while. TIMET is one of Boeing's suppliers and continues to see record prices for titanium. Titanium is not used just for airplanes but many other products like golf clubs, computers, and medical equipment. Several factors made me buy TIE over BA. The first being a slew of insider purchases, a relatively small float/marketcap, no steel exposure/only titanium, increased pricing power, only one analyst covers TIE/upgrades/coverage coming, and the chart showed good relative strength.

Note: I have no position in Boeing (BA) but I am long (TIE)


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