Cramer: In Crosshairs of ‘Cliff’, Does Boeing Have Wings?
If ever a stock seemed like it was squarely in the crosshairs of the fiscal cliff, it's aviation giant Boeing.
The company does a lot of business making planes for the U.S. military. And if we go over the cliff – the defense budget will be slashed by more than $50 billion.
Considering the circumstances, you'd think the price action in a stock like Boeing would be terrible.
But it's not.
Boeing is within a stone's throw of its 52-week high.
And -- according to technical analysis from Bob Lang, a Cramer colleague at RealMoney.com - the action in Boeing's chart suggest the stock has room to run.
Looking at the chart, Lang noted that in recent days, the price action in Boeing has been quite strong. Not only has the stock gone higher, but it has done so on solid and rising volume.
"This is a classic sign that big institutional buyers are accumulating the stock, and when the big boys get behind something, they have a tremendous amount of firepower to push it higher," said Cramer on Tuesday's broadcast.
Also patterns in the charts suggest Boeing has a strong floor of support at just under $69 - and it's been tested repeatedly. In other words, if the stock declines it shouldn't decline much below $69, according to the analysis.
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Second, after Boeing's big rally on Friday, where it vaulted more than $2 in a single session, this stock is now trading above all of its key moving averages.
Boeing has broken out over the 10-day moving average, a short-term measure of its trajectory, it's broken out over the 50-day moving average, a medium-term measure of its trajectory, and most important, with the move on Friday, the stock has broken out over its 200-day moving average, a long-term measure of its trajectory.
All told, the strong technicals – outlined above –are enough to attract buyers.
But that's not all – Cramer said the fundamentals are equally attractive.
"Sure, they do a decent amount of defense business, but some of that is with other countries, and more important, the vast bulk of Boeing's clients are not governments, they're commercial aerospace players," reminded Cramer.
Also, with the price of oil still relatively high, airlines are looking to buy new planes that are lighter and far more fuel efficient.
"Plus, not only has Boeing gotten the 787 Dreamliner in the sky and shipped off to customers, but they're now working on a new, larger version of the Dreamliner," said Cramer. That should also attract new buyers among the commercial airlines.
What's the bottom line?
"Just because a company seems like it's in the crosshairs of the fiscal cliff, doesn't mean its stock can't go higher. Looking at both the technicals and fundamentals in Boeing, the stock appears to have wings," said Cramer.
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