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Boeing (NYSE: BA) had a strong 2025, and hedge fund manager Dan Niles expects the stock to keep climbing into next year.

In fact, he dubbed BA a “top pick” for 2026 in a CNBC interview today – citing a combination of an impressive backlog, secular demand drivers, and improving cash flow.

At the time of writing, Boeing stock is up nearly 60% versus its year-to-date low in early April.

Massive backlog warrants investing in Boeing stock

Niles highlighted Boeing’s enormous order book as a key reason for optimism.

“They’ve got $600 billion in backlog that keeps growing. It’s almost seven times this year’s revenues,” he noted.

Such a backlog provides long-term visibility into future sales and production – offering investors confidence that demand for Boeing aircraft remains robust.

BA’s position as one of only two major global plane makers ensures that airlines and governments will continue to rely on its products.

For Niles, the scale of the backlog is more than just a statistic – it’s a sign of resilience, showing that BA stock can weather near-term turbulence while steadily converting orders into revenue over the coming decade.

BA shares stand to benefit from secular tailwinds

Beyond commercial aviation, Boeing shares are set to benefit also from powerful secular trends in defense and infrastructure.

Niles pointed to projects like the “Golden Dome” initiative in the US and NATO’s decision to raise defense spending from 2% to 3.5% of the gross domestic product (GDP).

These commitments mean billions of dollars’ worth of additional demand for BA’s military aircraft and systems.

“You’ve got some really big secular tailwinds,” Niles explained – emphasizing that geopolitical realities are driving sustained investment in defense.

With governments prioritizing security and modernization, Boeing’s defense division may become an even larger contributor to earnings. These tailwinds provide diversification, reducing reliance on cyclical commercial aviation markets.

Why else is Boeing worth owning for 2026?

Perhaps the most compelling part of Niles’ thesis is Boeing’s improving cash flow outlook.

After losing approximately $2 billion this year, the giant is expected to return to positive territory next year, generating low single-digit billions in free cash flow.

And by the end of this decade, Niles believes that figure would reach $10 billion, which still isn’t “a high bar to clear, these guys did $14 billion in cash flow in 2018,” he argued on CNBC.

Boeing’s ability to self-certify some of its planes will accelerate the recovery, reducing regulatory bottlenecks. For shareholders, the return of strong cash flow is critical – supporting debt reduction, dividends, and long-term growth.

Note that Wall Street shares Niles’ optimism on BA shares. The consensus rating on Boeing currently stands at “overweight,” with a mean target of $249, indicating potential upside of approximately 15%.

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