We recently published a list of 10 Worst Performing Dow Stocks Year-to-Date. In this article, we are going to take a look at where Boeing (NYSE:BA) stands against other worst performing Dow stocks year-to-date.
After the disastrous performance of 2022, the market has recovered better than expected and is on a growth trajectory. According to BlackRock’s Q4 2024 Equity Market Outlook, despite concerns about the economy, fundamentals have kept stocks resilient. Opportunities are seen in large-cap stocks, which may outperform both mega and small caps.
Volatility is viewed as normal and can create buying opportunities, especially when driven by market sentiment rather than fundamentals. Historically, market corrections of 10% or more are common but long-term investors have still enjoyed solid returns.
The report states that elections and Fed rate cuts may also impact the market, with rate cuts typically benefiting large-cap and high-quality stocks. Healthcare and consumer staples sectors have traditionally performed well after rate cuts, while cyclical sectors may improve as the economy recovers.
Finally, it mentioned that technology, which is usually a laggard in rate-cutting cycles, looks well-positioned this time due to innovations like AI. Long-term patience is essential in navigating volatility, as the market has proven resilient over decades through various crises.
READ ALSO: 8 Best Communication Stocks To Buy According to Analysts and 10 Worst Performing Blue Chip Stocks in 2024
Evaluating Volatility and Valuations in Today’s Stock Market
In a CNBC interview, chief strategist and economist of Solus Alternative Asset, Dan Greenhaus discussed stock market volatility, with mega-cap earnings and the upcoming election contributing to potential fluctuations. He mentioned that the market is already experiencing some volatility, as reflected in the elevated VIX. Despite this, he highlighted that the economy is still growing, albeit at a slower pace, and earnings are rising, which is creating a generally favorable environment for equities.
Greenhaus also addressed concerns about market valuations and noted that while current multiples are high historically, determining what constitutes “rich” valuation levels can be difficult without hindsight.
Lastly, Greenhaus referenced a trading strategy of “buying high and selling higher,” suggesting that investors should remain engaged in the market even during record highs.
Our Methodology
For this article, we checked the year-to-date performance of all the Dow components and selected 10 stocks out of 30, that had the worst share price performance on a year-to-date basis on October 21. We listed the stocks in descending order of their share price performance. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A commercial jetliner parked at an airport, reflecting the companies success in aviation.
The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 42
Share Price Performance Year-to-Date: -36.52%
The Boeing Company (NYSE:BA) is an American company that specializes in the design, manufacture, and sale of airplanes, rotorcraft, rockets, satellites, and defense equipment worldwide. Its diverse operations are organized into three main divisions: Commercial Airplanes, Defense, Space & Security, and Global Services. It is also a major exporter and continues to influence industries ranging from aviation to space exploration.
Boeing (NYSE:BA) has been facing significant challenges for a while now, which include, labor strikes, management changes, a deteriorating credit profile, and several consecutive years of earnings losses. In the second quarter of 2024, the company missed both revenue and earnings per share estimates, with a continued decline in 737 MAX deliveries. Its cash burn also worsened, and its leverage ratio rose significantly.
As reported by TipRanks on October 21, Bank of America Securities analyst Ronald Epstein maintained a Hold rating on Boeing (NYSE:BA) with a $170 price target. The analyst’s cautious stance is influenced by several factors. While the recent labor proposal between the company and the International Association of Machinists (IAM) leadership represents progress, it still requires union member approval, making the outcome of the vote critical to resolving the ongoing strike affecting operations.
Additionally, uncertainties persist, especially regarding pension cuts that could impact employee morale. The company is also facing challenges such as potential equity raises and workforce reductions.
On the other hand, Peter Arment from Robert W. Baird reiterated a Buy rating on Boeing (NYSE:BA) with a price target of $240. The analyst views the strategic contract agreement with the IAM union in a positive light. It aims to resolve the ongoing strike and includes significant wage increases and bonuses likely to gain member approval. The agreement is expected to stabilize operations and improve workforce morale.
Additionally, the company’s plans to raise equity capital and reduce its workforce are expected to strengthen its balance sheet and lower cash interest costs.
Overall, BA ranks 2nd on our list of worst performing Dow stocks year-to-date. While we acknowledge the potential of BA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.