Even after the attacks of September 14 on the oil facilities in Saudi Aramco, initially about 50% of the daily production of the Kingdom fell away, tensions in the Middle East continue to increase. Iran has been blamed for the strikes that have fueled the region and raised concerns about the possibility of war.
Further escalation of these geopolitical tensions would probably have a positive effect on three stocks on our radar – two of the, which are expected to benefit if prices rise again, and one of the.
1. Lockheed Martin : Largest Defense Contractor
Lockheed Martin (NYSE 🙂 a worldwide sky and aerospace, defense, security and advanced technology giant is both the world's largest defense contractor and the Pentagon's primary seller.
With the hostility between Saudi Arabia and Iran threatening to turn into a full war, it makes sense to focus on Lockheed, since most revenues come from military sales.
The company's missiles and fire control unit, which include the Terminal High Altitude Area Defense (THAAD) rocket, was one of the best performing units in the, with sales growth of nearly 16% to $ 2.41 billion .
Turnover of its aviation activities, the largest segment, increased by approximately 4% to $ 5.55 billion, driven by higher production of the F-35 stealth jet. The company delivered 29 F-35 combat aircraft in the quarter, compared to 25 in the period a year ago. Lockheed also said it was on schedule to deliver 131 F-35 & # 39; s by 2019. The stealth jet is the company's largest growth engine and accounts for around one-third of total sales.
Space and defense contractor shares ended Tuesday at $ 389.17, not far from their recent record high of $ 399.96 reached on September 17, giving it a market capitalization of $ 109.9 billion.
2. Halliburton : Leading Oil Services Corporation
Halliburton (NYSE :), one of & # 39; the world's largest oilfield service companies, operates in more than 70 countries. The Houston-based company posted a strong increase outside North America in its most recent, with revenues from international markets falling by more than 12% in the second quarter to $ 2.60 billion.
The company is likely to be a top candidate for contracts to repair and rebuild damaged oil infrastructure in the Middle East, as tensions between Washington, Riyadh and Tehran remain high. Additional attacks on crude pipelines and oil refineries in the region would lead to an increase in revenues.
Field service provider shares, which rose by 11% in the immediate aftermath of the Saudi attack, ended at $ 19.49 last night, giving it a market capitalization of $ 17.1 billion.
In addition to taking advantage of rising geopolitical fears, Halliburton currently has an attractive dividend yield of 3.52% with a quarterly dividend of $ 0.18 per share, making it an exceptionally attractive game in the current environment of falling rates.
3. EOG sources : primary American shale producer
Although EOG Resources (NYSE 🙂 is perhaps the third largest oil producer in the US, Chevron (NYSE 🙂 and ExxonMobil (NYSE :), it is by far the country leader in extracting oil from tight shale formations. In the second quarter of 2019, EOG produced an average of 455,700 barrels per day (BPD) from shale formations in the lower 48 states, setting a quarterly record.
The Houston-based company is the largest landowner in the Eagle Ford shale region, with over 500,000 hectares. EOG also has a large area in the Perm, Bakken, DJ Basin and Powder River Basin.
When increased tensions in the Middle East raise oil prices, EOG Resources is well positioned to benefit. Although it benefits from rising prices, it has no production in the tricky region. As such, there are no disruptions to the output.
Shale producer shares – which jumped 7% the day after the attack on Saudi Arabia – closed at $ 78.56 on Tuesday, giving it a market capitalization of $ 45.6 billion.
EOG & # 39; s dividend yield is now 1.42% with a quarterly payout of $ 0.29 per share. That is an increase of 72% in the last two years, which further increases the attractiveness of the share.
