Thursday, June 4, 2009
(Cont'd from above)...

Jim (cont'd):   

But tonight, right here, right now… I want to reveal something new… it is a bull market… you could even call it a veal market… we are coming to this baby bull early… but that is okay, since once it gets running the rally in this group will be a stampede of the multi-year variety as it always has been… do I have your attention ladies and gentlemen?… I want to put it in front of you now because we have got a catalyst staring us right in the face.. and another one in just two weeks… a catalyst so huge that you need to get in sometime in the next 10 days no matter what.

Now, I have dropped hints about this for weeks… but tonight, tonight, I am letting loose the bull in the china shop… I am exposing this market, this nation veal market for everything that it is worth… right here, right now I am pronouncing…. aerospace… as the next great bull market… one that could join the pantheon of oil, tech and finance… just like the others… aerospace will be lead higher by a general… and the name of that general is Boeing… how did I spot this one… how could I miss it… how could he miss it.

Alright, well there is of course the obvious the front page of the negative Street Journal… United plans huge jet order… could hit you over the head for heavens sake… this story by itself would not make you want to buy Boeing… you could be hit over the head by an airplane and you would not know to buy Boeing… in fact, United will be pitting Boeing vs. Airbus to get the best deal… frankly, I thought the most stunning thing about this article… that a company doing as poorly as United… and you know that I have never recommended an airline stock ever since the show began… which is doing so, so terribly… can still find the juice for $10B in planes… awful hard to fly without them, 150 jets.

That said… the story did get me intrigued… it gave me an idea, not a ready made stock pick, but a starting point… if the story had been about how Boeing was going to win the big order… you never, ever just buy off of reading something in the paper… no, you did what I did… you pull all the research on Boeing… and what did I discover… two monster data points… the first is something that I found very astonishing… very few firms recommend the stock, they do not like it… especially the big firms… in fact, they down right hate the stock… there are only 5 buys, 13 holds, and 3 sells… whenever you see that, it means that there are plenty of guys who upgrade… that is called ammo… I love ammo… but why would they do it.

Well, for starters every other year in June there is something called the Paris Air Show… which is like the biggest fashion show on earth for airplanes… it is like Vogue is there… plane vogue… I have always had a trading jones for this event… which this year is being held on June 16th, two weeks away… others like the Louvre, the Eiffel Tower, give me a break… Paris means planes, planes, and more planes… this is the show of the year… now, I predict that one of these bearish analysts will without a doubt turn bullish and break ranks… well, perhaps before the Paris air show… they all know too many people hate this stock.

Plus, in a market change in the last few years… Boeing finally has something positive to say… see I think that the 787 will actually be in the air… that is right, they are actually going to be able to take it off the ground, and start it, before the show… that is a big deal… this plane has had massive problems being produced… when the 787 is in the air… it will be a huge deal… in all the papers and all over the TV… because the darn thing is so long awaited… now, what you are right here, right now, on Cramer’s Mad Money getting the headlines ahead of the headlines.

Airbus, its European competitor, has a new plane too… but it too is having a lot of problems making this model… that is a big point in Boeing’s favor… why else do I think that Boeing will get the orders… okay, whenever you hear about the weak dollar you should automatically think good for Boeing… because a weak dollar makes it cheaper for foreigners to buy… as you can get more with fewer yen or euro’s… and then use those dollars to get more planes… now when Airbus competes against Boeing… while they are making two different planes… they are essentially commodities, interchangeable… as much as each company will say that their plane is better than the other… the dollar will tip the scales in Boeing’s favor… because its planes will be cheaper.

This is one of the reasons that I favor a weak dollar… tons of people get put to work when aerospace roars… and it can roar with competitive advantages that a weak greenback gives Boeing… now, why don’t the analysts like Boeing… where to even begin… the 787 has been delayed over and over again… fool me once, shame on me, fool me twice, shame on Boeing for downgrading… but once it gets in the air… problem solved.

Second, they are worried about cut backs in defense budget… but , we have not seen them…. they are concerned that Boeing’s pension plan will be underfunded… well, so maybe it has to do an equity offering… I think that the company generates a lot of cash… it has got a good balance sheet, decent 3% yield, and I think that it is safe.. you may have missed the bottom… but this $50 stock was at $78 last year.. so I say come on out and play.

Now, why do I think that aerospace will be a new bull market on the strength of Boeing… which was up $2 today… so we are not saying that you need to buy Boeing tomorrow… remember, Boeing does not make the whole darn plane… it has to buy all kinds of parts… it has even outsourced, it has actually split parts of its company away from itself so that it would have less exposure… so many companies get so many orders, from everything from titanium, the skin of the plane, that is Allegheny Tech (ATI)… Alcoa (AA), they make the fasteners or screws… Precision Cast (PCP), United Technologies (UTX), for jet engines and engine components… BE Aerospace (BEAV) which makes seating and storage equipment… Goodrich Corp. (GR) for pumping and take off and landing equipment… Triumph Group (TGI), makes components and accessories… Sprite AeroSystems (SPR) makes the fuselage and propulsion systems… Curtis Wright for precision components… Hexcel for composite materials… Ametek Inc (AME) for instrument systems… Rockwell Collins which makes electronics for planes… all of these, every one of them, should get big orders once companies start ordering planes again… like this… putting a lot of people to work and a lot of stocks to work… this is a gigantic industry that has been in a bear market for ever… you have got a whole menu to chose from… and I have got to tell you something… once this thing starts flying you will not believe the pin action.

So what should you do… well obviously the article in the Journal is being read… I mean Boeing up $2.25 today, 4.5%… my take is that you are early still… now the stock did just break out but you have catalysts, you have reasons, you have got a juggernaut… multi year order of new planes… I believe this because I have seen many aerospace cycles in my time, and it has always gone on for years and years… we call them 7 year cycles… we are able to make more and more planes at lower costs each year so things get really explosive… I think the earning on Boeing are way too low for 2010, based on the weaker dollar… new aerospace cycle, you can buy this one… two catalysts ahead, start to pick, chose from its suppliers… do I with that the stock were down today, of course… but with that article, well it wouldn’t be… let’s hope that the unemployment number is not so good… the stock comes down… and you can buy, buy, buy.

Here is the bottom line…

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The Bottom Line!:     We have got a new aerospace cycle, and you need to get in the game… the cycle will have pullbacks, problems with planes, cost overruns, worries about how much a plane costs, problems with the airlines industry…. but it is none the less, a bonafide bull market that has just started… very few people are in it, they think that it is all a trade… because the stocks are still trading near their multi year lows… you can buy Boeing, or the suppliers… because I think that they fly higher for years to come.   I think that Boeing or the suppliers can take your portfolio higher… and by the time we come back, I promise to have that plane up and running again.

[verbatim recap]

[verbatim recap]

[end of segment]

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