Aerospace and defense stocks are definitely under fire these days. Even after the U.S. House of Representatives passed a $601.4 billion defense spending bill Thursday, defense stocks like everyone else, find themselves battling the effects of high oil prices.

Yesterday, I wrote about the plagues of the airline industry in "Bargain Hunters Descend on Airline Stocks". Today, I'm still looking skyward to another airline, this time at the world's second-largest U.S. defense company, Boeing (BA). The company has been taking some major hits as of late, but I'm not ready to give up on this defense industry underdog.

Black and Blue But Still in the Ring

The facts are indisputable: It's been a tough stretch of late for Boeing Co. Its 787 Dreamliner has been plagued by supply-chain issues and is running 14 to 16 months behind schedule.

BA lost what has been called the "Mother" of all defense contracts: a $35 billion re-fueling tanker contract to Northrop Grumman (NOC) and is in another dispute to defend its win of a $15 billion contract for rescue helicopters (new bids are due in August).

After all that, Lockheed Martin Corp. (LMT), the world's largest defense company, beat out BA for a $1.46 billion U.S. Air Force award to build a new network of navigation satellites for military and civilian use.

Nevertheless, I believe in Boeing and its shares have compelling appreciation possibilities.

Knocked Down But Not Defeated

Boeing believes that the continued rise in energy prices will only fuel demand for its new energy-efficient planes.

I agree.

Its 787 Dreamliner may still be grounded, but fast-growing airlines in Asia and the Middle East are already lining up as buyers for the 787 Dreamliner, which uses 20% less fuel than current aircraft.

Not to mention that several fleets of U.S. carriers are simply old and will need to be replaced at some point in the near future. This should take place over the next 5 to 10 years.

Last but not least, BA is appealing the lost "Mother" of all defense contracts and has a lot of support on their side on Capitol Hill. BA stock trades for just 11 times '09 earnings expectations, and for less than one times revenue.

Boeing may be knocked down for now...but it's definitely not defeated!

Jamie Dlugosch

Editor, InvestorPlace