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A slew of bad press has been unable to knock Boeing Co. out of the skies, which is great news for the equity investment funds (including the Franklin Growth fund, our top mutual fund pick for 2011 which lists Boeing among its top 5 holdings). Some of the bad press facing Boeing these days includes the report out of Bloomberg where the FAA has ordered inspections on Boeing’s 757 aircraft thanks to a “hole” that developed at 31,000 feet on an October 2010 American Airlines flight and a “crack” that was discovered in September 2010 on an United Airlines plane. Without question, these leading airlines will have maintained the inspection cycle of their aircraft, which begs the question: how will they find a way to blame Boeing and what will happen to its stock price.

Keep in mind that Boeing has recently seen cancellations from Guggenheim Aviation Partners, which will impact their sales by more than $639 million. The reason for the cancellation has to do with delays in delivery on Boeing’s 747-8 jumbo jet, which does not look so good. And to further compound some of the negative press, the forecast reduction in military spending to the tune of $78 Billion over the next five years suggests that programs benefiting Boeing could also be impacted.

But our view is that Boeing remains a strong investment decision, both for large mutual funds and individual investors who are seeking healthy growth and regular income from common equity. With a 2.5% dividend yield as of the January 6, 2011 price, Boeing was actually trading UP all day on Friday, January 7. This reinforces investor sentiment in the security and company as a whole.

While there is certainly some foundation to being worried about how much bad press a company can take in the span of a few weeks, it seems clear that in light of military spending cutbacks, Boeing’s aerospace unit can still stand to benefit, particularly when it comes to Evolved Expendable Launch Vehicles, a device in which Boeing plays a role.

So there actually is some good, strong news for Boeing in spite of its recent press issues. And in reality, since the FAA is ordering that the airlines inspect the aircraft, it will really come down on the airlines, more than Boeing, to spend the effort and resources to inspect these 757 aircraft. According to the Bloomberg piece, there are currently six hundred and fifty eight (658) 757 aircraft in operation today, with American Airlines owning the most at 124 units and United-Continental owning 96.

Since many of the stronger performing equity mutual funds will not hold airlines among their top 10 holdings, more will be apt to hold FedEx and United Parcel Service (UPS). While we do not have updated data at the moment, none of the 47 mutual funds we cover hold Boeing in their top 3 (we will check in later after 2 weeks when our data sheet is updated to provide specifics on the top 10).

Ultimately, investors who were keen about our top mutual fund pick for 2011 and added Franklin Growth to their portfolio can take a deep breath after reading some of the negative press about Boeing. The stock remains strong in terms of performance and of course its dividend yield remains attractive. Bigger worries for equity investment funds would be the individual airline stocks, particularly Americain Airlines and United Continental whose fleets of 757 aircraft seem to be the largest. The inspection costs and FAA scrutiny will fall on them first. If it proves to be a manufacturing defect, then Boeing could find itself in the spotlight again.

As well, Boeing has been known to adapt to shifting economic times and despite the military cutbacks projected over the next 5 years, they will likely continue to benefit from what remains of military spending. As well, with a strong backlog of orders and a better control over production, one would expect that future cancellations will be minimized. If this is not the case, then perhaps it will be time to worry. As of right now, investors appear to be relatively safe with this security.