Is Boeing a Millionaire-Maker Stock?
On the surface, Boeing (NYSE: BA) looks as though it has all the ingredients of a potential millionaire-maker investment. The aircraft market is growing, competition is minimal, and government contracts are plentiful. But despite its many advantages, this aerospace leader has lost 60% of its value in half a decade. Has that decline created a buying opportunity for this once-stellar business, or should it be viewed as a warning to investors to stay far away?
The phrase "economic moat" -- popularized by investing legend Warren Buffett -- refers to certain types of durable competitive advantages a company can possess that make it difficult for potential rivals to make inroads against it. Boeing's moat is as deep as they come. In the large passenger aircraft market, it competes in a duopoly with European rival , with a market share of around 40% for large passenger aircraft (compared to Airbus's 60%). It also plays a notable role in U.S. defense contracting, supplying weapons systems like the iconic Apache helicopter.
Investors shouldn't expect the duopoly to end anytime soon. The large passenger jet manufacturing industry has an incredibly high barrier to entry because of the capital investments required, intense regulatory oversight, and the business relationships between manufacturers and major airlines that may be unwilling to experiment with new suppliers.
Source Fool.com
