We're buying the dip in a stock after an expectations reset
Shortly after the opening bell, we will be buying 40 shares of Boeing at roughly $173.23. Following the trade, Jim Cramer’s Charitable Trust will own 660 shares of BA, increasing its weighting in the portfolio to about 3% from 2.75%. We are picking up shares of Boeing, consistent with what we said last week after shares fell 10% in response to a disappointing earnings report. CEO Kelly Ortberg sank the stock by providing a multiyear free cash flow outlook below analyst and investor expectations, driven mostly by lower commercial-jet deliveries and increased capital expenditures to support the huge next-generation Navy fighter jet contract the company won in September. Heading into the print, analysts expected Boeing to deliver roughly $10 billion in free cash flow in 2028, according to FactSet. However, management pushed that timeline back a year to 2029. We are buying the sell-off for two reasons. The first is that this guidance reset has made expectations achievable and likely beatable as the company ramps up production at a conservative cadence. Second, Boeing should get some credit for having the visibility to give a multiyear cash flow outlook for the first time in years. Previously, there was a lot of uncertainty in 737 Max variant certification timelines as well as production and delivery schedules.But over the past two years, Ortberg has fixed the company culture, reduced risk in the supply chain, and has made progress in restoring trust. Now that the Max 7 and Max 10 have been certified by the Federal Aviation Administration, Boeing next year will begin delivering on a key piece of its $612 billion commercial backlog. (Jim Cramer’s Charitable Trust is long BA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
