Aerospace will be the next bull market, Cramer told viewers on Thursday, and Boeing could lead the group higher.
How can he make such a bold claim? Well, he predicted that Boeing’s long-awaited – more like much-delayed – 787 airplane finally will be released before the Paris Air Show on June 16. Cramer called Paris the industry’s “biggest fashion show on earth,” and he expects Boeing’s stock to move as a result.
That’s not all, though. Cramer also thinks at least one of the analysts that so vehemently hate this stock – see above 787 delays and fear of defense-budget cuts for reasons why – will change their call before the air show. Right now, there are five buys, 13 holds and three sells on BA. Just one change in position – and that level of disinterest is just begging for an upgrade – should be enough to bump up the stock.
Airbus also has a new plane coming out, but Cramer is betting Boeing will sell more. Why? The weak US dollar. Foreign firms get more bang for their buck when they buy American because euros and yen go farther here. So instead of buyers choosing between interchangeable commodities, they will get more value from Boeing because its planes are cheaper.
Maybe you’re wondering how this translates into a sectorwide rally? Boeing doesn’t make every plane part itself. Allegheny Tech makes the titanium skin. Alcoa makes the fasteners. United Technologies makes the jet engines and their components. Many companies are involved in the complete assembly of an aircraft, and almost all of them benefit when Boeing is doing well. Best of all, aerospace rallies tend to last for multiple years, Cramer said. Sure, there will be pullbacks, but overall the group will trend higher.
Boeing generates a significant amount of cash, has a good balance sheet and pays out a decent 3.3% yield. Investors may have missed the bottom, but this $50 stock was $78 last year. Also, the earnings estimates are too low, Cramer said, and any number of catalysts will propel the share price upward. He recommended buying BA right now and then picking and choosing from the company's suppliers.
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