boeing

THE BOEING CO. $72 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 757.0 million; Market cap: $54.5 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.3%; WSSF Rating: Above Average) will increase production of its 777 passenger jet to seven planes a month from five in mid-2011. In mid-2012, it will boost production of its 747 airliner to two planes a month from 1.5. The increases should let Boeing meet rising demand as the improving economy spurs airlines to replace aging planes. The company is also continuing to test its new 787 Dreamliner. Boeing is still on schedule to start delivering the new plane by the end of 2010. By 2013, it hopes to produce 10 Dreamliners a month, up from two a month now....

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs, but you will quickly make these back because of the low management fees. Shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

WESTJET AIRLINES $13.45 (Toronto symbol WJA; SI Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 138.8 million; Market cap: $1.9 billion; No dividends paid) has invested heavily in new planes and a state-of-the-art computer reservation system. But unlike most airlines, it has done so without taking on too much debt. That, plus its stellar reputation for customer service, makes it our Stock of the Year for 2010. WestJet serves 67 destinations in North America and the Caribbean. The company operates a fleet of 86 Boeing Next-Generation 737s. These planes feature more legroom, leather seats and television screens built into the back of each seat. But most important, the planes are roughly 30% more fuel efficient than older planes. And WestJet is scheduled to receive 49 additional 737s through 2016. In the three months ended September 30, 2009, revenue fell 16.4%, to $600.6 million from $718.4 million. Earnings fell 45.7%, to $31.4 million, or $0.24 a share, from $57.9 million, or $0.45. Cash flow fell just 5.5%, to $107.7 million, or $0.82 a share, from $113.9 million, or $0.89 a share. Although the recession hurt the company’s results, this marked WestJet’s 18th consecutive quarter of profitability....

WESTJET AIRLINES, $13.20, symbol WJA on Toronto, is our Stock of the Year for 2010. Next week, Wall Street Stock Forecaster, our newsletter that focuses on the U.S. stock markets, will reveal its #1 pick for 2010. Don’t miss this unique opportunity to profit. If you’re not already a Wall Street Stock Forecaster subscriber, click here to learn how you can get one month free when you subscribe today. WestJet serves 67 destinations in North America and the Caribbean. The company operates a fleet of 86 Boeing Next-Generation 737s. These planes feature more legroom, leather seats and television screens built into the back of each seat. But most important, the Next-Generation Boeing 737 is roughly 30% more fuel efficient than older planes. And WestJet will receive 49 additional 737s through 2016....

CEDAR FAIR L.P., $11.16, New York symbol FUN, jumped nearly 25% this week after the company accepted an $11.50-a-unit takeover offer from Apollo Global Management, a private equity firm. If Cedar Fair unitholders approve, the sale should close by April 2010. Cedar Fair owns 11 amusement parks, six outdoor water parks, one indoor water park and five hotels, mostly in the midwestern and northeastern U.S. The slow economy has hurt Cedar Fair’s earnings. As well, it recently suspended distributions to conserve cash for debt repayments. The units are currently trading about 3% below the offer. This indicates that investors don’t expect a higher offer....

Bombardier and CAE continue to diversify. This cuts their exposure to the air-travel industry, which has struggled lately. Both stocks are also attractive in relation to their earnings. BOMBARDIER INC. (Toronto symbols BBD.A $4.53 and BBD.B $4.51; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $7.7 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.2%; SI Rating: Extra Risk) is the world’s third-largest maker of commercial aircraft, behind Boeing and Airbus. Bombardier’s aerospace division supplies roughly half of its revenue, and two-thirds of its profits. The remaining revenue and earnings come from Bombardier’s transportation division, which is the world’s largest maker of passenger railcars and commuter trains....

WESTJET AIRLINES $11.80 (Toronto symbol WJA; SI Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 138.0 million; Market cap: $1.6 billion) serves 66 destinations in North America and the Caribbean. The company operates a fleet of 81 Boeing Next-Generation 737s....

ALCOA INC., $14.24, New York symbol AA, rose 10% this week after it reported better-than-expected earnings and sales. In the three months ended September 30, 2009, the aluminum maker earned $73 million, down 76.1% from $306 million a year earlier. Earnings per-share fell 81.1%, to $0.07 from $0.37, on more shares outstanding. Alcoa has seen weaker aluminum demand from clients in the automotive, aerospace and construction industries. In response, the company has consolidated plants and laid off workers. These moves should lower Alcoa’s costs by a total of $2.4 billion a year. If you exclude restructuring costs and a gain related to its increased investment in an alumina-refining operation in Suriname, the company would have earned $0.04 a share in the latest quarter. On that basis, analysts were expecting Alcoa to lose $0.10 a share....

Magellan Aerospace, $1.30, symbol MAL on Toronto (Shares outstanding: 18.2 million; Market cap: $23.7 million), makes and sells aerospace components and related services. The company supplies structural components for major commercial aircraft, such as the Boeing B737 and B787, and the Airbus A320, A340 and A380. It also has a number of military contracts to supply parts and services for fighter aircraft, including the F/A-18E, F-16, F-22 and the F-35. In the three months ended June 30, 2009, Magellan’s revenue rose 3.0%, to $177.3 million from $172.1 million a year earlier. Earnings jumped to $5.3 million, or $0.12 a share, from $783,000, or $0.02 a share. However, the latest quarter’s earnings included $3.5 million in pre-tax foreign-exchange gains....

THE BOEING CO., $51.04, New York symbol BA, rose 11% this week after the company said that its new 787 Dreamliner passenger jet would make its first test flight by the end of this year. Last June, Boeing had to suspend test flights after it discovered structural weakness where the plane’s wings connect to its body. The company now believes that it has fixed this problem. Boeing is unable to sell the first three Dreamliners it built because it made so many modifications to them in the design and testing process. As a result, it will classify their construction costs as a research expense. This will lower its third-quarter earnings by $2.21 a share. To put this in context, Boeing earned $1.41 a share in the second quarter of 2009. However, the charge is an accounting adjustment and will not affect Boeing’s cash flow or cash balances....