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The Boeing Company (BA), General Electric Company (GE): Aerospace Could Send the Dow (.DJI) Flying

Stocks turned upward this afternoon as the U.S. finally shrugged off any lingering negative impact from the Japanese stock market’s overnight plunge. By 2:45 p.m. EDT, the Dow Jones Industrial Average (INDEXDJX:.DJI) were up 115 points, continuing the run of triple-digit days we’ve seen recently as volatility perks up in both directions. The U.S. stock market has actually done a good job of ignoring international pressures recently, as it has managed to sustain its advances even as emerging-market stocks have produced substantial losses so far this year.

The Boeing Company (NYSE:BA)

One area of strength lately has been the aerospace industry, where greatly improved profitability among major airlines has led to increased capital spending and greater interest in boosting efficiency and long-term investment. The obvious aerospace pick within the Dow Jones Industrial Average (INDEXDJX:.DJI) is The Boeing Company (NYSE:BA), which has the dual strengths of being one of two dominant commercial-aircraft manufacturers and having extensive contracts with U.S. and international defense organizations. The Boeing Company (NYSE:BA) is up 1.1% today, having upgraded its long-term prospects for the industry earlier this week. Now, the aircraft manufacturer sees aggregate demand for 35,000 new planes over the next 20 years, with total potential revenue for the company of $4.8 trillion. With new models like the Dreamliner, the 777X, and the fuel-efficient 737 MAX, Boeing hopes to capture more than its fair share of this huge market.

The Boeing Company (NYSE:BA)’s impact ripples out to other major Dow Jones Industrial Average (INDEXDJX:.DJI) components as well. United Technologies Corporation (NYSE:UTX), up 1.6% today, has expanded its already substantial presence in the aerospace industry in recent years, with its acquisition of Goodrich marking the key event in its aim to become a major supplier of systems and components for the industry. Through its Pratt & Whitney subsidiary, United Technologies Corporation (NYSE:UTX) already makes engines for commercial, military, and private-business aircraft, as well as the parts and technical support to ensure they work correctly. Goodrich added products like landing gear and engine housings to make United Technologies Corporation (NYSE:UTX)’s overall offerings more complete, and looking ahead, the company can count on high aircraft demand to drive its own revenue as well.

Finally, General Electric Company (NYSE:GE) has a substantial aviation division with a focus on jet engines and related components. The division was the third-largest in terms of revenue for General Electric Company (NYSE:GE) in 2012, behind only the GE Capital division and GE’s power and water segment. GE Aviation hasn’t grown so fast as focus areas like oil and gas, power and water, or energy management. But with substantial roles to play in the industry, General Electric Company (NYSE:GE) should benefit from the rise of aerospace in the years to come.

Individual industries often get lost in the noise of the overall market. But the trends in aerospace all look good at the moment, promising success for companies that can capitalize on the massive opportunity there.

The article Aerospace Could Send the Dow Flying originally appeared on is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of General Electric.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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