Boeing is set to report its quarterly earnings Wednesday before the market open, and it will likely be strong on the top and bottom lines, a portfolio manager told CNBC in a Tuesday interview. But he said that's not going to sway him to buy the stock.
"From an operations perspective, we are relatively bullish. We think the wind is at their back. But from the valuation perspective, we would be somewhat more, let's just say, circumspect about their valuation at this point," Chad Morganlander, portfolio manager at Washington Crossing Advisors, said Tuesday on CNBC's "Trading Nation."
Shares of Boeing, which have advanced 71 percent this year alone, are trading nearly 25 times forward earnings, according to FactSet data. This valuation gives Morganlander pause, and he said he'd recommend looking elsewhere in the aerospace industry.
He likes United Technologies at this juncture, as he's hopeful for its acquisition of aircraft parts manufacturing firm Rockwell Collins.
"We believe that there's substantial upside at a significant discount of valuation to Boeing," he said of United Technologies.
Another factor Morganlander considers when evaluating defense stocks is geopolitical concerns, which he said "embolden" defense spending.
"We believe that Boeing, as well as United Technologies, will actually benefit from that aspect," he said.
Should investors already own shares of Boeing in their portfolios, Morganlander said, he would recommend holding on to the investment. As for United Technologies, he would advise an overweight position for "new portfolios."
Analysts are expecting earnings of $2.65 per share, according to FactSet estimates. Boeing gained over 1 percent in Tuesday trading.
Disclosure: Chad Morganlander's firm owns shares of United Technologies. He does not personally own the stock.