Boeing shares look like ‘value trap’, traders warn

Boeing shares look like 'value trap', traders warn

Boeing offered a longer-term bullish forecast for demand this week, but the action paid little attention.

The company on Tuesday raised its outlook for expected deliveries over the next two decades. Stocks, however, remain very low for the month and have fallen 23% since their peak in March, putting the stock in bearish territory.

Over the past month, stocks have fallen 9%, making Boeing the worst performer on the Dow Jones Industrial Average. Boeing’s stock has struggled to recover since two fatal crashes of its 737 MAX model in late 2018 and early 2019.

However, a more optimistic long-term outlook is not enough to get Joule Financial chairman Quint Tatro to take action.

“Over the next few decades, we’re going to see orders increase. That’s good, but that doesn’t change the fact that this company has a negative book value; it completely cuts its dividend. So when you wait for those 10 or 20 years, you won’t get paid anything, ”Tatro told CNBC’s“ Trading Nation ”on Tuesday.

Tatro says its sharp drop in recent years could tempt investors looking for a bargain in the market. He warned against this.

“A lot of people can look at it and say, ‘It’s a price game,’ but I think it’s a price trap,” he said. “I will wait for a real material and fundamental change that is in the present, without looking out, and this will be the occasion to enter into the name.”

New Street Advisors founder Delano Sapporu agrees: Boeing’s long-term outlook hasn’t changed his take on the stock.

“In a very short period of time [I’m] Certainly not any faster. This is a stock on which I have taken some profit over the past few months, ”Sapporu said in the same interview.

He said investors will need to see current demand return to pre-pandemic levels for commercial jets before they can return to stock.

“Right now, investors should stop, take profits. I think there are going to be a lot of benefits for Boeing in the near future, ”he said.

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