Analysis: BA HON ABT

We have a new bullpen name and it is one we didn't think we would ever add given the significant headwinds the company has faced. The stock is Boeing (BA) , and we think the time has finally come to take a hard look at this aerospace and defense company that has struggled ever since the March 2019 grounding of its 737 MAX program.

Before we talk more about Boeing, as a reminder, you can read more information about our bullpen at the page here. Additionally, our full bullpen list can be found on the page here.

We are warming up on this one, because we think a positive conclusion to the 737 MAX saga is near. We have been waiting for Steve Dickson, the head of the Federal Aviation Administration, to fly on the 737 MAX before we could ever get serious about investing in this company, and it finally happened on Wednesday.

While there is still more work needed to certify the 737 MAX, Dickson said, "I like what I saw on the flight."

This brings us back to a Sept. 20 piece by Goldman Sachs, where they added Boeing to their "Conviction List" and talked about how the MAX recertification "could be a key catalyst."

Essentially, Goldman said an end of year recertification is possible now that regulators in the US, Canada, and Europe have all completed test flights and have started to analyze the data. In fact, Goldman says all the recent milestone events provide "greater visibility than has existed at any other point in the process."

Of course, there is always going to be skepticism and there will be plenty of people who say you cannot buy BA until we see the 737 Max fly again, but we think we might need to get ahead of the pack here. One of the key reasons why relates to free cash flow, one of the most important metrics investors use to value Boeing. Goldman Sachs thinks Boeing's free cash flow will inflect in 2021, and based on the analysts' work, the free cash flow inflection point has historically been a good entry point to get in the stock. And in a normalized year like 2023, Goldman estimates Boeing will generate about $22.40 FCF per share, a figure so large we think investors will not be patient about if visibility behind the numbers improves.

As for some risks, clearly Boeing will need to see the airlines bailed out if they are ever going to start buying planes again. But we think this will happen, because the political pressure is too great. And thinking more about Boeing's order book, we can make the case that the worst of the aircraft order cancellations out of the backlog is in the past. The pace has significantly slowed since the spring. There could still be more cancellations down the road, but we think Boeing is much closer to the trough compared to six months ago.

If the state of global travel is your concern, Boeing argues the design of the cabin and airflow systems creates the equivalent of over six feet of social distancing even on a full flight. Plus, you have companies like Honeywell (HON) developing UV cabin systems to disinfect airplanes, and Boeing has developed a mobile UV wand to combat the spread of the coronavirus. And the new 15-minute rapid test by Abbott (ABT) could be the game changer that eventually opens up tourism again without the necessary 14-day quarantines for some locations. When a real testing system is in place, it will be hard for countries to turn down tourists from the United States again, and this could create a surge in traffic due to pent-up demand. Again, this is something we think we need to be early on.

We will continue to monitor the stock now that it is in the bullpen. It may be one of the most hated stocks in the market right now, but we know air travel always recovers and we think the right approach to the stock is to anticipate that recovery before the good news hits.

Action AlertsPLUS, which Cramer co-manages as a charitable trust, is long ABT, HON.