Boeing Looks Like a ‘Value Trap,' Trader Warns as Stock Trails the Dow in Past Month

Barry Sweet | Bloomberg | Getty Images

Boeing offered some upbeat, longer-term guidance for demand this week, but the stock paid little notice.

The company increased its outlook for expected deliveries over the next two decades on Tuesday. Shares, though, remain sharply lower for the month and have dropped 23% since a March peak, putting the stock in bear-market territory.

Over the past month, shares 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.

A more optimistic long-term outlook is not enough to get Joule Financial President Quint Tatro interested in the stock, though.

"Over the next couple of decades, we're going to see orders on the rise. That's great, but that doesn't change the fact that this company has a negative book value; it's completely cut its dividend. So while you're waiting those 10 or 20 years, you're not going to get paid anything," Tatro told CNBC's "Trading Nation" on Tuesday.

Its sharp decline in recent years could entice investors looking for a bargain in the market, says Tatro. He warns against that.

"A lot of people can look at this and say, 'This is a value play,' but I think this is a value trap," he said. "I would wait for a real material, fundamental change that is in the present, not looking out, and that's going to be the opportunity to get into the name."

Delano Saporu, founder of New Street Advisors, agrees — Boeing's long-term outlook did not alter his view on the stock.

"In the short term [I'm] definitely not more bullish. This is a stock that I've been taking some profit in over the last few months," Saporu said during the same interview.

He added that investors will likely need to see current demand return to pre-pandemic levels for commercial aircraft before they return to the stock.

"Right now, investors should hold, look to take profits. I think there's going to be a lot of bumpiness in the near term for Boeing," he said.


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