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Is The Boeing Company (BA) Back on Track?

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The Boeing Company (NYSE:BA got a couple votes of confidence of late, including the approval by U.S. regulators and the Federal Aviation Administration of the “high level system description” of its 787’s electrical system, which in effect certifies the safety of its advanced lithium-ion batteries used in the 787 Dreamliner jets.
The Boeing Company (NYSE:BA)

The other big news is that despite the grounding of its Dreamliner, Boeing posted impressive results for 1Q 2013. This includes EPS up over 20% year over year to $1.44. What’s more is that excluding pension charges, EPS came in at $1.73, compared to consensus estimates of $1.49 (on the same basis). The stock rose 3% on the news, but should investors take this as an “all clear” signal?
The Boeing Company (NYSE:BA) is the largest aircraft manufacturer in the world in terms of revenue, orders and deliveries, and one of the largest aerospace and defense contractors.
Boeing has impressive exposure to the commercial aircraft industry, with one of the big tailwinds for the company being the expected recovery in the global economy, where passenger traffic should be the key driver. S&P expects that air traffic will grow 5% annually over the next two decades.

The Boeing Company (NYSE:BA)’s revenue exposure is spread across more than 90 countries around the globe, and it also happens to be one of the major players in the defense business, which accounts for approximately half of its revenue. Boeing’s defense business is a bit more insulated than some of the other major defense contractors, where Boeing has a $71 billion order backlog in the segment as of the end of 2012.

This is given the fact that the U.S. Department of Defense appears to be fond of Boeing’s F/A-18 fighter jet, EA-18G Growler (carrier), P-8A Chinook helicopter, and Apache and Osprey rotorcraft. The Boeing Company (NYSE:BA) is also increasing its presence in cyber security, intelligence and surveillance and unmanned systems.

The company has a nearly $390 billion total order backlog and a strong balance sheet, with cash and short-term investments of over $13.5 billion at the end of 2012, compared to long-term debt of only $9.0 billion. What’s more is from a hedge fund angle, The Boeing Company (NYSE:BA) has some of the highest interest, with 41 hedge funds longs the stock going into 2013, which was a 14% increase from the prior quarter.

The top hedge fund owner at the end of 2012 was Doug Silverman’s Senator Investment Group, with a $188 million position, accounting for 4.1% of its total 13F portfolio. Meanwhile, Billionaire Ken Griffin was in second with 2.4% of its 13F portfolio allocated to the stock.

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