Boeing will probably have great earnings, but I'm not buying: Portfolio manager

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.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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