War is ugly, but it presents lucrative investment opportunities. Here are some key stock picks for the coming months.
Russia's invasion of Ukraine sent shockwaves throughout the world.
As Western nations impose severe sanctions on Putin, his close circle of oligarchs and Russian companies, investors wonder how to play these events in the markets.
While it appears cynical, war is big business.
Shrewd investors should pay particular attention to the stocks of companies poised to benefit from the delicate geopolitical and economic situation.
Here is a collection of the 21 best stocks to buy during these troubled times.
The first category of stocks to buy is defence contractors.
These companies specialize in manufacturing arms and military equipment for the U.S. army. In times of war and geopolitical instability, their stock prices should rally as they will be required to support the U.S. Army, NATO allies and the countries being defended from aggression.
Here are the key companies to include on your watch list:
- Raytheon Technologies generates 94% of its revenues from defence contracting.
- Lockheed Martin generates 88% of its revenues from defence contracting.
- Northrop Grumman generates 87% of its revenues from defence contracting.
- General Dynamics generates 63% of its revenues from defence contracting.
- The Boeing Company generates 29% of its revenues from defence contracting.
Considering the U.S. Defence budget is roughly $715 billion, the U.S. military-industrial complex is flush with cash. These five companies present exciting investments in the current context.
The Russian-Ukrainian conflict is driving the price of oil to new highs.
At writing, the barrel price hovers around $110, the highest since 2014.
As a result, all the major oil companies are strong buys should the conflict and economic sanctions last:
- ExxonMobil is one of the world's largest oil companies, with annual revenues exceeding $170 billion.
- With operations in more than 180 countries, Chevron Corporation is engaged in almost every aspect of the oil and natural gas industries.
- B.P. p.l.c. It operates in 80 countries, produces roughly 3.7 million barrels per day and has total proven reserves of 19.945 billion barrels of oil.
- TotalEnergies was ranked as the 29th-largest public company in the world by Forbes in 2019. It is a highly diversified conglomerate with operations on every major continent.
- Royal Dutch Shell PLC has operations in over 99 countries, produces around 3.7 million barrels of oil daily, and has an estimated 44,000 service stations worldwide.
- Marathon Petroleum Corporation is the largest petroleum refinery operator in the U.S.
With oil prices not slowing down, it may still be time to capitalize on the inflationary trend.
Surveillance & big data
Modern warfare is more than just weapons and equipment.
These days, data analytics is crucial to strategizing and outwitting opponents.
Thus, Big Data analytics, cybersecurity, and surveillance firms with ties to the Department of Defence are compelling buys.
Peter Thiel's Palantir Technologies is the best stock to buy for exposure to military data analytics.
Palo Alto Networks is another firm to place on your watchlist. This multinational cybersecurity company serves more than 70,000 organizations in 150 countries, including 85 of the Fortune 100. In times of war and aggressive cyberattacks, its services are in high demand.
Finally, Maxar Technologies is the third stock to consider buying. The space technology company specializes in manufacturing communication, Earth observation, radar, and on-orbit servicing satellites, satellite products, and related services. It is currently in the limelight for providing satellite images of Russian troops marching towards Kyiv.
Renewable energy companies
As the price of oil rockets to new heights, Western nations may be tempted to accelerate their transition away from fossil fuels.
As a result, renewable energy companies will continue to garner investor interest:
- Brookfield Renewable Partners owns over 200 hydroelectric plants, 100 wind farms, over 550 solar facilities, and four storage facilities, with approximately 16,400 MW of installed capacity.
- Clearway Energy, Inc is a giant renewable energy owner in the United States with over 4,700 net M.W. of wind and solar projects.
- First Solar is a producer of solar panels and a provider of other services like finance, maintenance, and construction.
- And end-of-life panel recycling.
- Tesla, the world leader in electric vehicles, is poised for yet more massive growth in the coming years. Panasonic just announced its intention to build a multi-billion dollar factory in the USA to supply Tesla's batteries.
The renewable sector is still in its infancy, and investors should expect plenty of volatility. Investing in this sector presents a high-risk, high-reward opportunity that risk-tolerant investors should seriously consider.
You may be surprised to find media companies on this list.
As gruesome as it sounds, war is good for big media ratings. However, it makes perfect sense once you think about it.
As the world is glued to their T.V. and smartphones, anxiously awaiting the latest news, investors should consider the following stocks:
- AT&T is the world's largest telecommunications company and the largest provider of mobile telephone services in the U.S.
- Paramount Global (ex-Viacom CBS), a multinational media and entertainment conglomerate that operates over 170 networks and reaches approximately 700 million subscribers in over 180 countries as of 2019
- Fox Corporation is one of the U.S.' leading news, sports, and entertainment networks.
- In addition to owning leading film production companies such as Walt Disney, Pixar, Marvel and Lucasfilm, Disney also owns ABC broadcast network, ESPN and National Geographic.
These four groups control a wide array of news outlets that are sure to profit from the rise in the audience during this crisis.
The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions.