Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

The Boeing Company (BA): How to Profit from the Next Big Thing in Airplane Innovation

Page 1 of 2

With the commercial debut of The Boeing Company (NYSE:BA)’s 787 “Dreamliner” aircraft in 2011, and Airbus’ anticipated introduction of the A350 sometime in 2014, the shift towards replacing aluminum and titanium with carbon fiber composites in aircraft bodies is already well underway. Carbon composites offer significant weight and strength advantages versus aluminum, which leads me to believe that this trend will only continue to strengthen in the coming years. Investing in major aerospace carbon fiber composite suppliers such as Cytec Industries Inc (NYSE:CYT) and Hexcel Corporation (NYSE:HXL) could prove a savvy way for investors to participate in this secular trend within the aerospace industry, as the increasing use of carbon fiber in aircraft bodies could provide a very long growth runway for these two companies to take flight.

The Boeing Company (NYSE:BA)

A Long Runway for Growth

Aircraft manufacturers are aiming to incorporate more and more carbon composites in their aircraft designs because carbon composites offer a much higher strength-to-weight ratio than traditional aerospace metals such as aluminum or titanium. Thus, using aerospace carbon fibers allows an airplane to be both lighter (and therefore more fuel-efficient), as well as stronger than a metal frame plane. The new Boeing Company (NYSE:BA) 787 Dreamliner, for example, is roughly 50% carbon fiber by weight, which is orders of magnitude greater than earlier planes such as the Boeing 767 and 747, which had less than 10% of their weight comprised of carbon fibers. As a result, the Dreamliner is 20% more fuel-efficient on average than a similarly sized The Boeing Company (NYSE:BA) 767.

The demand growth for aerospace composites can come from three different avenues. The first is the greater use of composites per plane, as exemplified by the Dreamliner using well over five times the amount of carbon composites per aircraft than its predecessor, the Boeing 767. The second is the exponential increase in the number of carbon fiber-intensive aircraft that will be manufactured. The Boeing Company (NYSE:BA) delivered 46 Boeing 787’s in 2012, and 17 so far in 2013 (as of the end of June). However, the company has 864 unfilled orders still in its backlog, with this backlog continuing to grow as we speak. Even if some of these unfilled orders are eventually cancelled, that is a lot of Dreamliners that have to be built, which will lead to a corresponding increase in aerospace carbon fiber consumption. Once Airbus’ competing product, the A350, reaches commercial production, the demand growth for aerospace carbon composites will only accelerate.

Finally, carbon composites will likely be used more and more in future aircraft platforms beyond just the Boeing 787 and the Airbus A350. Carbon composites are already a huge component in state-of-the-art fighter planes such as the F-22, and as carbon composite technologies become more refined and affordable, I think that it will eventually be used in future narrow-body airplane platforms alongside wide-body platforms such as the The Boeing Company (NYSE:BA) 767. New aircraft platforms that will consume a heavy dose of carbon composites could continue to lengthen the growth runway for aerospace carbon fiber demand long after the Boeing 787 ceases production.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!