Stick with Boeing as long-term prospects remain bright

CNBC’s Jim Kramer said on Thursday that he still intends to remain a shareholder in Boeing, although he admits the aircraft manufacturer is in dire straits.

“Sometimes the long-term prospects of a company are so strong that you have to be prepared to endure the short-term agony when management is wrong and they do so. But that’s why it’s worth the pain at Boeing, ”he said. “Crazy money,” said the host.

Kramer’s comments on Thursday followed American Airlines announcing a cut in international flights for next summer, citing long delays in the delivery of Boeing 787 Dreamliners.

It was Boeing’s last remaining operational problem in recent years, including two 737 Max crashes in 2018 and 2019, which killed a total of 346 people. The company also faced challenges related to the Covid pandemic and an associated slowdown in travel demand.

Kramer said his charitable foundation was “hit by Boeing,” which is down 3% year-to-date after closing on Thursday at $ 207.56 a share. The stock has dropped about 40% over the past two years.

However, he said his commitment to Boeing stock was not due to his stubbornness and inability to admit an investment mistake.

Rather, he said it’s because he believes the company has better days ahead, including structural demand from airlines upgrading their fleets to newer and more fuel efficient aircraft. In addition, he said the continued improvement in the pandemic should trigger strong travel demand in 2021.

“While the short term is absolutely dire … I think the long term is ridiculously optimistic,” Kramer said. “If you sell Boeing shares here, I think you’ll kick yourself, but I don’t know when. I can not tell. So were those of us who were stupid enough to sell CVS or Viacom because we couldn’t see when the turn would happen. “

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