THE BOEING CO. (New York symbol BA; www.boeing.com) is a leading maker of passenger jets.

The company launched its latest plane, the 787 Dreamliner, in 2011. The 787 uses advanced materials that are lighter than aluminum. That makes it 20% more fuel efficient than comparable planes. It also features state-of-the-art jet engines and electronics.

However, the new plane is off to a rocky start. In early 2013, air travel regulators grounded all 787s in response to a problem with the lithium-ion batteries that power the electrical systems. Boeing has since fixed the problem, but the stock remains sensitive to any bad news regarding the 787.

The 787 is just a small part of Boeing’s commercial jet division, which accounted for 53% of its 2012 revenue and 61% of its earnings. Most of the remaining 47% of its revenue and 39% of its earnings came from making military aircraft and satellites.

Boeing’s revenue rose from $64.3 billion in 2010 to $81.7 billion in 2012. Earnings rebounded from $1.87 a share (or $1.3 billion) in 2009 to $4.46 a share (or $3.3 billion) in 2010 and rose to $5.11 a share (or $3.9 billion) in 2012.

Investing in stocks: With 787 in production Boeing able to reduce research spending

Even with the recent 787 setbacks, demand for Boeing’s planes continues to rise as airlines replace their aging jets with new, more efficient models.

As of June 30, 2013, Boeing’s commercial aircraft order backlog was $337.7 billion, up 6.4% from $317.3 billion at the end of 2012. However, governments continue to cut defence spending as they deal with rising budget deficits. As a result, Boeing’s defense backlog fell 6.5%, to $51.5 billion from $55.1 billion.

Now that the 787 has moved from the design phase to production, Boeing is spending less on research: $763 million (or 3.5% of revenue) in the second quarter of 2013, down 11.0% from $857 million (or 4.3% of revenue) a year earlier. The company is also applying the knowledge and expertise it gained while developing the 787 to its other planes.

Lower research spending has freed up cash for debt repayments. In the first half of 2013, Boeing cut its long-term debt by 3.1%, to $8.7 billion. That’s a low 11% of its market cap. It also held cash of $14.3 billion, or $19.00 a share. Boeing’s $1.94 dividend yields 1.8%.

In the latest edition of Wall Street Stock Forecaster, we examine Boeing’s outlook as it finally works its way through its problems with the Dreamliner. As well, the shares are up 40% for our subscribers over the past year and we look at whether they can go even higher. We conclude with clear buy-hold-sell advice on the stock.

(Note: If you are a current subscriber to Wall Street Stock Forecaster, please click here to view Pat’s recommendation. Be sure to log in first.)

COMMENTS PLEASE—Share your investment experience and opinions with fellow TSINetwork.ca members

Bad news about its Dreamliner plane affected Boeing’s stock some six months ago, but the company’s shares have rebounded since then. Do you have an example of a stock that recovered from what seemed to be very damaging news? Or of a stock that failed to recover from the glare of negative publicity? Let us know what you think.