I’ve been overwhelmingly bullish on Boeing Inc. (NYSE: BA) for years, since long before I started publishing Private Briefing in 2011, but it’s nevertheless one of the very first stocks I recommended for my subscribers.
It goes deeper than that, in fact: I can’t remember a time in my life when I wasn’t absolutely nuts about airplanes, aeronautics, and the adventures aviation has spawned throughout history.
It was a passion I inherited from my late dad, a physicist by education and an engineer by experience. He started his long and honorable career with Hamilton Standard and Pratt & Whitney up in Connecticut – and ended that career with Northrop Grumman Corp. (NYSE: NOC).
So, naturally, I’ve been closely following details of the tragedy outside Addis Ababa, Ethiopia, where a four-month-old Boeing 737 MAX 8 airliner crashed six minutes after takeoff, claiming 157 lives.
Investigators from all over the world are on site outside Addis Ababa, and the black boxes have been recovered.
And because this is the second crash of a MAX 8 aircraft in less than six months, countries from Indonesia to China to Mexico have begun to ground the MAX 8, with the United Kingdom being the latest. Boeing’s “home turf,” the United States, has yet to make a move either way.
The shares, which have given my subscribers peak gains of more than 582%, have taken a bit of a cliff dive. They fell more than 12% between Friday’s pre-crash close and Monday morning’s opening about 24 hours after the crash. And because Boeing is a “whale,” the most expensive component of the Dow Jones, Boeing’s troubles sent a good chunk of the stock market reeling.
The uncertainty over both the safety of the MAX 8 and the solidity of Boeing’s all-important “order book” is understandable. No doubt the professionals are racing for the answers, with billions of dollars and, more importantly, potentially millions of travelers’ lives at stake.
So let me share with you why I’m every bit as bullish on Boeing this morning as I was on Friday…
Crash or Not, the “Second Golden Age of Aviation” Is Coming
Dad and I loved airplanes of all types. But we shared a special fascination with the so-called “Golden Age of Aviation” – the 20-year stretch between the two world wars when airplanes evolved from rickety wood-and-fabric biplanes into speedy and sleek all-metal monoplanes.
It was a period marked by innovation, barnstorming, air races, and adventures of all types. It’s also when airplanes evolved from an unreliable novelty into “instruments of colossal and shattering power,” as Winston Churchill said just before the Battle of Britain in in 1940 – true weapons of war – before becoming peacetime catalysts for travel and global commerce.
Airplanes were flat-out sexy during that period – and captured the public’s attention in a way that the Internet, smartphones, and other cutting-edge technologies do today.
The pilots were huge celebrities – the “reality stars” of their time. The companies that built the planes were as closely followed as Apple Inc. (NASDAQ: AAPL), Amazon.com Inc. (NASDAQ: AMZN), and other tech firms are today.
Time hasn’t diminished what these folks achieved: The pilots – and their aircraft – are legends.
Dad told me stories about – and I read about – exploits of aviators like Charles “the Lone Eagle” Lindbergh, Wiley Post, Cal and John Rodgers, Charles Kingsford-Smith, Roscoe Turner, Al Williams, Howard H. Hughes, Richard Byrd, and Douglas “Wrong Way” Corrigan.
My mom always admired Amelia Earhart. And my dad and I particularly revered Jimmy Doolittle, remembered best for leading the April 1942 Tokyo Raid that helped avenge Pearl Harbor.
But Doolittle’s resume was much, much deeper than that. Jimmy had a reputation as a barnstorming daredevil who won air races, set speed records, and did the first “outside loop.” (During his Depression-era U.S. Army Air Corps days, Doolittle actually won a bet by straddling a biplane’s landing-gear axle while a buddy was landing the plane; unfortunately, one of his superiors saw him do it.)
But Doolittle also earned a Master’s and a Ph.D. in aviation from the Massachusetts Institute of Technology (MIT), championed the development of the 100-octane fuel that became a key to U.S. airpower in World War II, and pioneered so-called “blind flying.” In 1929, for instance, flying a test biplane with a canvas hood over his cockpit, Doolittle became the first pilot to take off, fly and land an airplane using instruments alone – a “blind flying” feat that won him widespread newspaper acclaim as well as the Harmon Trophy.
Through the years, I’ve also read everything I can find about Doolittle’s exploits setting speed and distance records and winning air races flying the speedy “Gee Bee,” a twitchy, unforgiving, barrel-shaped plane that actually killed just about every other pilot who tried to fly it.
During my teens, I even found Jimmy’s address, wrote to him, and got back an autographed photo.
I’m sharing this personal story for a reason. You see, so many times through the years, I wistfully told my Dad that I wished I could’ve watched some of these “Golden Age” achievements firsthand.
Well, it looks like I’m going to get my chance.
You see, aviation is entering a “New Golden Age.”
It’s going to be a massive wealth opportunity, with unmanned aerial vehicles – drones – servicing as a central storyline.
And as the story I’m about to share will demonstrate, we’re watching this new era unfold before our very eyes.
As with any human achievement you can name, there will be setbacks; there will be tragedies like Ethiopian Airlines Flight 302 – just as there will be incredible progress and unimaginable new heights.
And for investors who hold their nerve and accumulate stocks like Boeing on their unstoppable upward arc, there will be untold wealth.
If you don’t own Boeing yet, I suggest you buy today. This “New Golden Age of Aviation” is just getting started.
Here’s a sneak peak at what that future looks like – and why it’s got “Boeing” written all over it…
Under Attack? Out of Gas? Call “the Equalizer”
In several stories that I recounted in recent months, I’ve talked about a new aerial tanker program that led to Boeing winning a major contract to supply specialized drones to the U.S. Navy.
Boeing has given this new unmanned aircraft an official corporate designation – the MQ-25 Stingray.
But I gave it an even better nickname in my report. I dubbed it “the Equalizer” – like the popular 1980s TV show that starred Edward Woodward as ex-spy and vigilante Robert McCall.
In the TV show, McCall has retired from a shadowy, unnamed government espionage agency and is seeking his own brand of atonement for past acts done. He uses a newspaper ad to find the helpless, the bullied, the unjustly punished – and then applies his “skills” to put things right.
As one online writer said, “Woodward plays Robert McCall to perfection, bringing a dark undercurrent of anger and sorrow to the man while still allowing his compassion for the downtrodden to show through.”
So true.
Indeed, with his black glasses, black topcoat, and (cool) black Jaguar XJ6, McCall was a stealthy visage who battled back against government corruption, gangsters, and greedy business types in order to “equalize” whatever situation he faced.
And that’s just what the Boeing drone will do.
Boeing designed the Stingray to serve as a “flying gas station” for Navy combat jets.
Boeing beat out Lockheed Martin Corp. (NYSE: LMT) and General Atomics Aeronautical Systems Inc. for an initial $805 million contract to build four Stingrays and supply them to the Navy.
That’s just for starters, though.
The Navy plans to buy 72 more of these – meaning the total “program” will have a value of $13 billion. And the core design will then be available for adaptation into other combat planes, too.
The MQ-25 Stingray is a “demonstrator” jet – an unmanned “flying gas station” designed to refuel the Navy’s Boeing E/A-18E/F Super Hornet jet fighters, Boeing EA-18G Growler electronic warfare plane, and Lockheed F-35C Lightning II fighter planes.
The Navy issued its final request for proposals back in October. Those proposals were supposed to be due Jan. 3. However, Boeing surprised experts – and leapfrogged its rivals – by unveiling its demonstrator in late December.
Here’s why this is such an innovatively amazing program.
Given the “hot spots” simmering around the globe, this could emerge as a critical aircraft.
It could become “the Equalizer.”
In the combat scenarios of today, air power is crucial. Air power provides “cover” for ships and land forces and is part of the vanguard in any effort to strike an enemy.
But because the big “hot spots” of today are faraway places like North Korea, Taiwan, and the South China Sea, the Pentagon faces challenges in “projecting” U.S. air power.
Indeed, it has two options.
For the U.S. Air Force and bombers like the Northrop Grumman B-2 Spirit or the Rockwell B-1B Lancer – even with the benefit of “staging” fields – long-range flights that start in the mainland United States will add time and risk to air strikes. And those long overflights often require aerial refueling from Air Force jet tankers.
The Navy, with its aircraft carriers, can “steam” close in to these “hot spots.”
But jets like the Super Hornet and Lightning II have much shorter flight ranges. For instance, the current effective strike radius of a Super Hornet is about 450 miles. But with an MQ-25 tanker, that attack radius could be extended to at least 700 miles.
New anti-ship weapons – like China’s vaunted DF-21D hypersonic “carrier killer” – will serve as “stand-off” weapons that force the Navy to keep its ships farther back, out of harm’s way.
The short range of the carrier-based jets and these new threats put an even greater premium on range-extending aerial tankers.
And the Navy’s “Stingray” could “equalize” that threat by circling near the edge of a jet’s combat radius – to offer an aerial “fill-up.” Because they are unmanned, the ability to have them circle “closer to the action” evens the odds even more.
It truly will be “the Equalizer” – and a great chapter in “the New Golden Age of Aviation.”
Boeing has thrown off peak gains of 582% since since we first recommended it in August 2011. With dividends, the total return approaches 650%.
And it’s outlasted bearish critics and weathered crises with aplomb along the way, too.
— William Patalon III
Source: Money Morning