A consequence of a weakening airline sector is the pain it will cause plane-maker Boeing (NYSE: BA). With capacity tightening, the need for aircrafts is diminishing.
Imagine planes just sitting idle in the desert. That vision is becoming a reality.
Fortunately for investors, that vision will take time to play out. In the meantime, Boeing gets a free pass as they work through years of order backlog that built up during the last business cycle.
If you take a look at Boeing during the last few months, it is clear that investors have yet to catch on to a world of lower revenues going forward.
Shares of Boeing did drop in tandem with the credit crisis, but there has yet to be the washout one would expect from a business environment that will be very difficult for Boeing going forward.
Shares of Boeing hit a floor of $40 per share during the October/November stock market collapse. That was before the carnage in the airline industry became apparent.
Since that time, conditions have only become worse for the group. The way to survive in such an environment is to cut capacity. That is not a good thing for Boeing, and why I made it one of my Top 10 Stocks to Avoid in 2009.
Thus far, I have been dead on with my list that included Delta Air Lines (NYSE: DAL) and United Airlines (NYSE: UAUA). Both of those stocks are down big in 2009. Boeing, on the other hand, has traded flat.
In my opinion, the market is missing something here. Boeing should be down in tandem with these giant carriers. The fact that it is not, provides investors an opportunity to sell before the market catches on to the weakness.
Wednesday Boeing announced poor fourth-quarter results. The company posted a loss of $56 million, or 8 cents per share in the period. Analysts had expected the company to make a profit of 78 cents per share.
This is a big miss made worse with a weak forecast for 2009. The company now expects to make $5.05 to $5.35 per share in 2009. That is less than the $5.68 per share analysts now estimate.
Go figure. But the stock was up $1 per share on the news. Can you say inefficient?
I can and I will. I would have expected shares to be down 10% or more on this type of performance. The real kicker for me is that 2009 is baked into the cake due to the advance time for orders.
The fact that they are reducing that number is telling and does not bode well for 2010.
Louis Navellier's PortfolioGrader Pro, which offers free ratings for nearly 5,000 Wall Street stocks, rates BA a D or Sell.
Jamie Dlugosch is a contributor to InvestorPlace.com.
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