I recently caught wind of a deal that’s likely another profit catalyst for one of my favorite stocks – a “Rocky” stock that’s been declared a loser before but keeps piling on the gains.
I filled my paid-up Private Briefing subscribers in on it last weekend, and now I want to let everyone here know about it, too.
It’s a good deal, and we all know Trump loves a good deal - especially ones that shave off millions in, as he might say, "ridiculous" project costs.
Well, now it looks like the U.S. Air Force might have just found a doozy of a deal for the president.
Right now, it’s just collecting dust at a Mojave Desert “boneyard,” but it could very well end up being “SAM 30000” – the new Air Force One.
And you’ll never guess who Trump would have to thank for it...
These Are Some Very Cool White Elephants
Almost eight months after U.S. President Donald Trump first criticized the "exorbitant" costs of the Air Force One replacement project (a move that caused Boeing shares to dip briefly, handing us another attractive entry price), the commander-in-chief is close to settling on a new deal with The Boeing Co. (NYSE: BA).
Here's the strange twist:
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The 747-8s that will be modified to become the president's personal fleet were once scheduled to be part of an airline... in Russia.
That’s right. For the next few decades, presidents of the United States could be soaring around the skies in ex-Russian airliners.
Earlier this week, the Air Force revealed that it intends to buy two mothballed 747-8s that were abandoned by the now-defunct OJSC Transaero Airlines.
In 2013, Transaero - the second-largest airline in Russia at the time - ordered the two 747-8s.
Now, I love aviation, so I’m biased - but any way you slice it, Boeing’s machine is superlative: It’s the biggest of the iconic 747 “jumbo” jets, the biggest commercial aircraft built in America and the longest (but not biggest) passenger airplane in the world.
You can fly off the lot, so to speak, in a new 747-8 for right between $380 and $387 million, depending on “trim level.”
But the truth is, Boeing sees these jumbo aircraft sales as long-term opportunities – relationship builders - so they’re generally open to some haggling on the sticker price. That’s according to CSDS Aircraft honcho Benedict Sirimanne, who told Quartz that airlines can see discounts of anywhere from 40% to 50% for big aircraft orders.
Whatever the Transaero deal cost, the Russian airline couldn’t pay. They defaulted on payments to Boeing.
Two years later, in 2015, the airline went belly-up.
PJSC Aeroflot-Russian Airlines (MCX: AFLT) - Russia's largest airline - absorbed most of Transaero's fleet and many of its staff at the time, but, for whatever reason, it opted out of those 747-8 orders.
Following Transaero's implosion, Boeing flew the planes to a storage facility at the Southern California Logistics Airport in the Mojave Desert, where they've been ever since.
Now, they could be the president's next personal jets.
However, it's not a done deal - yet.
I’m Really Excited by This Development
In a statement, Air Force spokesperson Ann Stefanek said, "We're working through the final stages of coordination to purchase two commercial 747-8 aircraft and expect to award a contract soon."
Meanwhile, Boeing spokesperson Caroline Hutcheson said, "We're still working toward a deal to provide two 747-8s to the Air Force - this deal is focused on providing a great value for the Air Force and the best price for the taxpayer."
Boeing’s not talking numbers (it rarely does when it comes to individual deals), but if the pattern holds, the Air Force can probably count on a juicy discount - something which ought to make the boss happy.
The Pentagon has already awarded Boeing a contract worth $3.2 billion (not $4 billion) for preliminary engineering and design work for the two jets.
If it tacks a purchase contract on to that, it would be followed by yet another contract covering the extensive modifications to turn a run-of-the-mill Boeing 747-8 into “SAM 30000” - a massively sophisticated flying fortress and global communications hub, theoretically capable of staying aloft 24 hours a day, indefinitely.
I’m excited about the possibility of this deal, the new technology it will likely unlock for Boeing, and the enhanced prestige of the company.
For us, Boeing continues to be one of the great global-investing stories around. It's the best-performing member of the Dow Jones Industrial Average so far in 2017.
When I first recommended Boeing, the stock was trading at $61.92 a share.
But it was seen as a dog. Wall Street wanted nothing to do with the company. Investors were still feeling burned by the whole "Great Recession" bear market and thought that capital-intensive companies like Boeing were too risky.
They weren't willing to consider the immense long-term market potential for commercial jets.
They were wrong. We were right.
Since then, Boeing has zoomed as high as $246.49 - a 298.6% peak gain for my paid subscribers; Money Morning Members playing along have seen a nice profit, too.
That makes this a stock you want to accumulate and profit from for years to come.
The Pentagon is eagerly pursuing a new technology that could eventually make high-tech Air Force One look like an old biplane. These machines are intelligent, hyper-capable, potentially lethal, and quite possibly less than six months from hitting the defense markets… and making a huge splash with early investors, who could see explosive gains before it’s all said and done. Click here for Bill’s investigation into the tiny company at the center of this revolution in military hardware.
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About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.