By California-based investment manager Jerry Braakman has suggested that Boeing Co.’s stock may experience further selling pressure in the near term. Despite believing that Boeing’s fundamentals remain positive, Braakman advises against buying on the current dip. Braakman predicts that the stock will be in the penalty box for some time and that selling pressure may continue for a couple of weeks.
After falling 8% on Monday, Boeing shares dropped an additional 0.7% during afternoon trading on Tuesday.
Although Braakman acknowledges that the latest issue with the 737 Max, which concerns how a Boeing part is installed, is not as severe as previous problems relating to manufacturing, he regards it as a mere road bump that does not alter Boeing’s identity or direction.
Investors will gain insight into Boeing’s fundamentals and management’s outlook when the company releases its fourth-quarter results on January 31.
Braakman deems the timing of the latest issue as particularly disappointing, given that investors were starting to regain confidence as airplane demand improved.
Introduction
In the year 2023, the Boeing stock witnessed a remarkable turnaround, with a significant rise of 36.8%. This success story brought an end to a three-year losing streak, during which the stock had experienced a substantial decline of 41.5%. In comparison, the S&P 500 index (SPX) recorded a gain of 24.2% in 2023, following an 18.8% rise over the previous three years.
A New Set of Challenges
However, despite this positive momentum, investors are advised to proceed with caution. Christian Braakman, an investment expert, emphasizes the need for a vigilant approach. He believes that just as the stock was leaving its troubled past behind, new challenges arise unexpectedly. It is as if every time one sees a glimmer of hope, it quickly becomes overshadowed by another setback.
An Investment Perspective
Braakman does not advocate for hasty purchases of Boeing stock at this moment. However, he also advises against selling the stock for those who already possess it. Instead, he suggests that there will come a time when it will be prudent to consider buying it again.
The Boeing Edge
One may wonder why owning Boeing stock would still be advisable despite the recent challenges. Braakman attributes it to several factors that make Boeing an attractive investment opportunity. Firstly, the company boasts an exceptional product line. Additionally, it faces minimal competition in its industry. Moreover, the demand for its products from the airline sector remains consistent.
A Noteworthy Situation
Undeniably, the recent issues faced by Boeing are unfortunate. However, Braakman asserts that these issues alone do not alter the fundamental reasons to invest in the company. They should not affect one’s investment thesis significantly.
Take a Cautious Approach
While recognizing Boeing’s potential, Braakman warns against making impulsive investment decisions or trying to predict the stock’s bottom. Instead, he advises waiting and observing how regulators handle the situation and how the stock performs over time.
Conclusion
In conclusion, despite the recent challenges faced by Boeing, there are still compelling reasons to consider it as a worthwhile investment opportunity. However, investors are advised to exercise patience and remain vigilant before making any decisions. As Braakman wisely puts it, one must avoid “catching the falling sword.”
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