THE BOEING CO. $43 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 726.4 million; Market cap: $31.2 billion; Price-to-sales ratio: 0.5; WSSF Rating: Above Average) is focusing on improving the fuel-efficiency of its passenger jets. That should help it increase sales to cost-conscious airlines.

Boeing’s new 787 Dreamliner plane uses lightweight materials, like titanium and carbon fibre. That makes it 20% more fuel-efficient than current planes. The 787 also features new energy-efficient interior lighting systems, which will lower its operating costs further.

However, Boeing had to delay the initial test flight last June because it found structural weakness where the plane’s wings connect to the body. The company feels it can fix this without redesigning the plane, and hopes to resume testing in the next few months. Despite this setback, Boeing still has 851 orders for the 787. These are worth around $151 billion.

Meanwhile, Boeing earned $997 million in the second quarter of 2009, up 17.2% from $851 million a year earlier. Earnings per share rose 21.6%, to $1.41 from $1.16, on fewer shares outstanding. If you exclude one-time costs in the year-earlier quarter stemming from delays in fulfilling a defense contract, earnings per share gained 2.2%. Revenue rose 1.1%, to $17.2 billion from $17 billion.

News of the 787’s problems pushed down Boeing’s share price to $39 from the $53 it reached in June. However, the plane still has strong long-term potential. Boeing’s stock trades at 9.3 times the $4.64 a share the company will probably earn in 2009. The $1.68 dividend yields 3.9%.

Boeing is a buy.