The ongoing escalation of tensions between Iran and Israel has reverberated through global markets, resulting in losses for most risk assets. With minimal prospects for a short-term resolution, investors are on edge about how markets will react as the conflict unfolds in the Middle East.
However, several companies stand to be affected by the conflict. In this context, Finbold has identified the following three stocks to monitor regarding the conflict in the coming week.
Exxon Mobil
The conflict in the Middle East, which could lead to disruption in oil supplies, may have a global impact on prices. Exxon Mobil (NYSE: XOM) is one of the major oil producers and can gain from possible price hikes that might increase its profits and make its stocks more attractive to investors.
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However, alongside the prospect of profit escalation from surging oil prices, the conflict also introduces risks that could affect Exxon Mobil’s operations. With a global presence and diversified operations across various regions, the company’s spread can help mitigate the risk associated with relying solely on Middle East oil supplies.
Additionally, Exxon Mobil possesses extensive experience navigating geopolitical disruptions, positioning them well to adapt and potentially profit in this environment.
Looking ahead, if oil prices rise significantly, Exxon Mobil might consider increasing shareholder returns through stock buybacks or higher dividends, further enhancing the equity’s attractiveness to investors.
In the meantime, after starting a year on a low note, XOM has made a recovery to trade at $120.37 by press time. The value represents a year-to-date increase of about 17%.
Lockheed Martin
An escalation of the conflict could prompt countries in the region, especially Israel, to increase military spending. Lockheed Martin (NYSE: LMT), a leading defense contractor, would be well-positioned to benefit from such an increase in spending, potentially leading to a rise in its stock price.
Lockheed Martin has been at the forefront of developing advanced weaponry and defense systems. This focus on innovation can position them well with the right foundation to secure lucrative contracts in the future, even if the current conflict resolves quickly.
Additionally, the company’s diverse portfolio includes critical defense systems, which are in high demand during conflicts, further boosting its revenue potential. Its longstanding relationships with governments and defense agencies worldwide, coupled with its ability to adapt to evolving threats, position it well to capitalize on opportunities arising from geopolitical instability.
Moreover, Lockheed Martin has a track record of maintaining steady revenue and profitability, even during uncertain times, making its stock attractive. Such a move would help LMT revive its fortunes in 2024, considering that the equity has mainly traded in the red. By press time, the equity traded at $450.40 with YTD losses of about 1%.
Palo Alto Networks
During times of tension in recent years, cyberattacks have been on the rise. Palo Alto Networks (NASDAQ: PANW), a cybersecurity company that focuses on protecting critical infrastructure, is likely to experience a higher demand from countries engaged in conflicts.
Hostile actors are taking advantage of vulnerabilities for purposes such as espionage, sabotage, and financial gain. Palo Alto Networks offers threat protection, firewall services, and cloud security to combat these threats.
As governments prioritize cybersecurity investments, Palo Alto Networks’ customized solutions for defense agencies and critical infrastructure help prevent disruptions. Investors looking for safe investments in sectors like cybersecurity may also increase the demand for Palo Alto Networks’ stock, especially as tensions escalate.
Interestingly, as reported by Finbold, PANW is among the equities that have experienced an uptick in buying activity among United States politicians in recent months.
However, despite this political interest, PANW has faced challenges in 2024, with the stock dropping by over 3% to trade at $279.07 at press time.
While the highlighted stocks are fundamentally linked to geopolitical tensions, their potential benefits will not solely depend on receiving conflict-related news but also on overall market sentiment.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
