Where Cramer stands on two beaten-down aerospace stocks — and the one to buy

Jim Cramer said aerospace stocks may offer long-term opportunities despite pressure from higher oil prices and interest rates. GE Aerospace's commercial orders rose 58%, including a 235% increase in equipment orders, and its backlog reached $170 billion, though free cash flow fell 14% year over year and its valuation is about 37 times the midpoint of updated full-year earnings guidance. Boeing reported 300 net commercial aircraft orders and record backlogs of $612 billion in commercial aircraft and $101 billion in defense, but its multiyear free-cash-flow outlook missed expectations and 737 Max production is not expected to ramp significantly until late next year; Cramer was more cautious on Boeing.

Analysis

The key distinction is backlog visibility versus cash conversion. GE’s engine orders support the long-cycle thesis, but they do not remove the near-term valuation risk: a premium multiple leaves little room for continued free-cash-flow slippage. Track cash conversion and delivery execution, not order growth alone. For Boeing, a large backlog is less useful as a near-term valuation anchor while production remains constrained and management’s cash-flow path has reset lower; upfront defense-program spending may also absorb cash before any eventual payoff.

The sector’s demand risk is indirect but real. Persistently expensive fuel or financing can pressure airline economics and defer deliveries; lower utilization could also delay aftermarket work, an important potential spillover for engine economics. Conversely, long lead times and fleet replacement needs can buffer original-equipment demand, so the impact may appear in deferrals and cash timing before outright cancellations. Airbus and engine suppliers such as Safran are relevant read-throughs, but the article provides no evidence that they are insulated.

Contrarian point: record backlogs are not equivalent to firm, timely revenue or free cash flow. Near term, Boeing’s guidance reset may establish a lower bar, but the “clearing event” thesis needs proof in production and cash generation. Over 6–18 months, execution matters more than the secular-demand narrative.

Key Decisions for Investors

• Prefer GE over BA on a relative basis, not as an unconditional sector call: consider a staged GE-long/BA-underweight position, sized for GE’s valuation and both names’ execution risk. Reassess if GE’s free-cash-flow conversion weakens further or Boeing improves production and cash guidance faster than expected.
• For GE, wait for evidence that order strength converts into deliveries and cash flow before adding aggressively; a further FCF miss or guidance reduction would falsify the buy-the-dip case despite backlog growth.
• For BA, avoid treating the backlog as a near-term cash catalyst. Watch 737 production cadence, free-cash-flow delivery against the revised multiyear outlook, and whether Navy fighter spending continues to pressure cash; sustained execution would weaken the underweight thesis.
• Monitor oil prices and airline capacity/delivery deferrals over the next 1–3 months. A meaningful deterioration in airline economics would challenge the assumption that elevated fuel costs are not impairing aircraft demand; no options position is warranted without clearer timing and volatility data.