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Options Investing: Think Globally

Posted January 30, 2008

“If you want to continue making money, you have to think globally. And as always, if you want to make the kind of profits worth bragging about, you have to find the investments wrongly underrated by the Street. ” – Andrew Snyder

By Andrew Snyder

Baltimore (TFN) — American investors and economists have just one thing on their minds, recession. Wall Street has blinders on to everything but interest rate cuts and 2008 earnings forecasts. In today’s global economy, that kind of egocentric mentality will cost you big time.

Just because many Americans believe the economy will slip backwards during this year’s first quarter does not mean the rest of the world is doing just as bad. It is just the opposite. All that money Americans are losing is headed overseas in the form of oil proceeds, debt refinancing, and export profits. We lose, they win.

That means if you want to continue making money, you have to think globally. And as always, if you want to make the kind of profits worth bragging about, you have to find the investments wrongly underrated by the Street. Lately, we have had plenty of options.

Flying under the radar

One of my favorites is Boeing Co. (BA:NYSE). The airplane manufacturer has seen its value drop by more than 30% over the last few months. Meanwhile its business is improving. It has created a fantastic buying opportunity, especially for savvy options investors.

Investors are slashing the company’s valuation because of the faulty belief that a slowing American economy will greatly impede Boeings profitability. As we are already learning, they are way off the mark. In fact, American plane buyers account for just 11% of the manufacturer’s business. The remaining 89% comes from overseas, mainly in areas with booming economies.

Boeing finished 2007 on a high note, recording earnings of $1.03 billion, $14 million more than the same period in 2006. This year looks to be even better, with the contract outlook appearing “very strong.” Right now, Boeing boasts an unheard of order backlog of over $320 billion, an impressive number that will continue to grow.

One reason for shares of the company to embark on a recent downward trend is worries about Boeing’s latest prize, the 787 Dreamliner. Many analysts are worried because the manufacturing process has been riddled with supply chain and assembly line snags. One of the chief issues has been how to move the plane’s gigantic components from one plant to the next. Even so, the first 787 is expected to go into service early next year.

Coffee isn’t the only thing brewing in Seattle

The Dreamliner project may be getting the most attention, but it is Boeing’s stellar commercial fleet that deserves the attention. I flew over the facility last week. Even from two miles above its giant hangars, it was obvious it was all hustle and bustle in Seattle. No wonder earnings jumped by nearly 50% last quarter.

Boeing is a global corporation that should not be grouped with domestic companies that will be severely impacted by an American recession. A falling dollar, a soaring Asian economy, and a huge demand for large, economical planes will make this company a long-term winner.

That is fantastic news for you as Boeing is extremely undervalued. As I write, shares are selling for just over $83. This summer, they were approaching the $100 mark.

As I mentioned before, this is an excellent opportunity for investors looking for a rather safe play with high profit potential. Within a few months, we will have all of this recession mess worked out. The direction ahead will be obvious. As the markets turn around, investors will once again realize the value of a global titan like Boeing. That is why I like the May call options series for this play.

Get your hands on the Boeing May 90 Calls (BAER.X) while they are still cheap. It will not take much news to get share price soaring.

Interest rates are low, the dollar is weak, and most countries are experiencing booming economies. It is the perfect scenario for Boeing and its investors.


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Posted by Andrew Snyder · Filed Under US Stocks and Markets 

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