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How Boeing Became the No. 1 Dow Stock and Why It Could Stay There

Two months ago, on May 17, the U.S. government said it would investigate a claim by Boeing Co. (BA) that Canada illegally subsidized sales of its C-Series aircraft to Delta Air Lines Inc (DAL) . Immediately, Canada warned that it could cancel its planned purchase of 18 Super Hornet fighter jets.

Investors dumped Boeing stock. Shares closed May 16 at $182.70. The next day they traded as low as $175.40, down 4%.

That turned out to be a major buying opportunity because Boeing shares have been on a tear ever since.

While the Dow Jones Industrial Average average has gained 3.1% since the May 16 close, Boeing shares have gained 14%. Year to date, the Dow has risen 9.49% while shares in Boeing, the No. 1 performer on the Dow, have jumped 34%.

On Friday, Boeing closed up $2.28 at $208.51 after JPMorgan analyst Seth Seifman upgraded shares to overweight from neutral. He has a price target of $240.

Boeing on Monday, July 17, was up 1.6% to $209.62.

"The stock has outperformed {the Dow} by 25% YTD and there is only 15% upside to our Dec 2018 price target of $240, yet we still believe the upgrade is warranted in a market where outsize upside is elusive," he wrote.

Seifman listed five reasons for the upgrade.

"First, BA is among the stocks best positioned to benefit from positive aero fundamentals," he said. "Second, BA is consciously trying to shape the industry to capture more value for itself, which could mean strong relative performance and potential upside to estimates.

"Third, our {free cash flow} and {earnings per share} estimates are moderately above...