The real clues about the market tend to come when volatility hits the scene, which is what the S&P 500 has demonstrated over the past month. As volatility creates short-term uncertainty and borderline chaos in the market, the real areas of interest for investors and other types of capital start to show themselves across the board. With this in mind, one stock has been spotted as outperforming the broader S&P 500 recently.
As Boeing (NYSE:BA) broke out in mid-March 2025, other dynamics were at play, making this company a potential buy in the middle of all this volatility and uncertainty. The manufacturing sector in the United States could start to become the center of interest for several investors in the coming months and quarters. Current speculation on where the trade tariffs announced by President Trump could lead more capital to two specific sectors in the market.
One of these sectors is the space of industrial stocks, and recent institutional flows might show investors how this belief is justified in the recent reports of institutional buying and selling activity within the Industrial Select Sector SPDR® Fund (NYSE:XLI). More than that, the market is telling investors that as Boeing takes off, the risk appetite for basic materials stocks is rising as raw materials are needed to support a breakout in manufacturing.
Boeing Stock’s Upside Potential & Its Drivers
As of February 2025, analysts from Citigroup decided to reiterate their Buy ratings on Boeing stock, but the optimism didn’t stop there. The recent ratings included a boost in valuations to $210 per share compared to the previous valuations, which were set at $207 per share.
This new view would call for not only a new 52-week high in Boeing stock but also a net implied rally of as much as 18% from where the stock trades today. Despite Boeing being ridden by negative media spurred by some incidents in its parts and equipment safety during 2024, markets seem to think these factors have been wiped from the story.
Considering that the stock now trades at 90% of its 52-week high, investors can safely assume that Boeing has bullish price momentum to justify the double-digit upside implied by analysts. One strong fundamental factor also supports this view for higher prices in Boeing stock.
Wall Street analysts now forecast that Boeing will report positive earnings per share (EPS) for 2025, which would be a massive improvement from today’s reported net losses. Considering that EPS growth rates typically drive stock price action and valuations, this is another pillar for Boeing bulls to lean on moving forward.
Realizing that the theme is set for Boeing on the upside, short sellers decided that the juice isn’t worth the squeeze on this discounted name. The risk-to-reward ratio definitely favors buyers at this point, which drove the stock’s short interest to collapse by 10.9% over the past month alone, a clear sign of bearish capitulation today.
Optimism For The Industry Adds Momentum to Boeing
While not directly related to Boeing’s success as a company, optimism for industrial and basic material names can benefit Boeing as a stock since it could also attract more buyers by association. This is where tracking institutional buying and selling activity could become extremely important for investors.
Those from Ameriprise Financial decided to boost their holdings in the industrial exchange-traded fund (ETF) by as much as 12.8% as of February 2025, bringing their net position to a high of $476.8 million. This bet on the rising industrial sector is an indirect bet on companies like Boeing coming out of a funk, again, by association.
A similar story can be told about the basic materials sector. Suppose Boeing’s demand rises from here, as recent announcements of orders coming out of China might be a key factor in realizing these EPS forecasts for the company. In that case, this theme should also increase the demand for basic materials.
That reasoning might be why up to $955 million worth of institutional capital made its way into the Materials Select Sector SPDR® Fund (NYSE:XLB) over the past quarter. Investors need to remember that while this is not a direct benefit to Boeing, connecting the dots could make sense as to why Boeing can keep breaking new ceilings.
The ultimate gauge can be taken from the $8.8 billion in institutional capital that decided to call Boeing stock home over the past quarter as well; it would seem that the broader market is looking to hedge S&P 500 volatility by beginning to price in these bullish EPS forecasts in the company.