Thought I would never say this. But I am going to blurt it out: It’s time to buy the stock of Boeing (BA) .
I know, that seems like taking your life in your hands. But I have been waiting for the head of the Federal Aviation Administration to fly on the 737 MAX and Wednesday he did, and the test looks like a good one. That might set in a chain reaction to get this jet sold.
Goldman Sachs recently put out an excellent piece talking about how the MAX recertification “could be a key catalyst.” It thinks that this test and others from Canada and Europe, which I think will fall in line, are going to be milestones that could lead to a year-end recertification.
There is, indeed, broad skepticism about everything I just said. People want to wait and see. I don’t think you can do that for a couple of reasons. Goldman says the free cash should be positive in 2021 and that it could surge to $22 a share in a most normalized 2022. How can you possibly wait until you see the MAX certified without the crowd flocking in ahead of you?
Yes, we need to see a bailout of the U.S. airlines if they are going to start buying planes. Even if things go awry in Washington, I think the airlines get their way, because there are too many constituents in too many areas who need competitive airlines to go places or the voters will go nuts. That’s why the airlines are always getting money, and when they get money, they are eventually going to buy more planes.
But, you might say, who cares? No one’s going to travel anyway.
Here’s where I think the airlines have done a grave disservice to themselves.