Transcription
The headlines may change every minute, but the war will be over sometime, and these three stocks are set to benefit when it is. Joining us today is Mark Likenfeld with the Oxford Club. He's going to share those three names that are set to benefit whenever this conflict ends.
So, Mark, we're not really talking about a prediction on when this conflict might end today because that seems a little impossible to do right now. As you know, the headlines change not even every day, but every hour based on a a post to Truth Social or a press conference or what have you. So, uh it's impossible to predict when it will end. I I am pretty comfortable in predicting that it will end at some point. Uh and when it does, certainly stocks will react just as they reacted to the beginning of the war.
>> Yeah. Before we get into the three names that you have for us today, talk about your strategy. I know you are a very solid uh dividend investor. talk about your strategy when the market sees the kind of volatility that we've been seeing really since this conflict began. It seems the market reacts so much. What's your strategy during this kind of a time?
>> I guess that's that's kind of a two-part answer. Looking at the dividend strategy, that is very much a long-term strategy and it and it really shines during periods of volatility like we're seeing now. You know, if you have a a stock that's paying a four or 5% yield and that dividend is growing every single year and it's a solid business, certainly the war and the disruption in oil can affect all areas of the economy. But generally speaking, these are stocks that were holding for the long term that have gone through all kinds of periods before and have continued to raise their dividends. So for those stocks, for the most part, I am not concerned at all. We're just, you know, we know that stocks overall go up and to the right. You know, if you're looking at a chart over the long term and so that's what we're banking on that this time is not different and, you know, life will go on uh and the market will continue to do what it has always done over the long term.
Shorter term is is different. Shorter term, you know, we are trying to get a handle on volatility, on sentiment. You know, this has been an interesting situation because everything suggests the market should go lower. Uh, you know, not just because of conflict, but because of the disruption to the oil supply that that that theoretically should really hammer global economies for the foreseeable future. Even if the war ended today, it's going to take a little while to get that supply uh, you know, the supply chain back online because a decent amount of energy has been taken offline. So everything says that the market should be going lower and it is going lower but we are starting to see a little bit of kind of that risk on mentality. We are starting to see not necessarily today but you know last week uh we were starting to see some stocks rallying. We're starting to see breadth increase. So it's not the market is not predicting such a dire outcome as you would expect given the headlines.
Yeah, the headlines are a lot right now and they are making a real impact on portfolios. We've heard from lots of our viewers who say the retirement accounts have been deeply affected by the downturn that we've seen over the last few weeks and I know that you are all about a wealthy retirement. That is a special newsletter that you have and your strategy for how to weather these kinds of storms that we see this volatility so that your retirement funds are not so heavily impacted during events like these. If you want to learn more from Mark and his team at the Oxford Club, we have a QR code here and a link in the description that you can scan to get a free look at the wealthy retirement program and how it can benefit you, especially during these times.
Mark, I know we have these three stocks to talk about. There's a lot to dive into with these three names that you have for us today, but I do have one more question and that's just addressing kind of that elephant in the room for those investors out there whose portfolios, especially their if they're in their retirement, who have been impacted right now. What are your words of maybe some some calming words for those who might be panicking when they see the real impact of what's happening in the world and how it's hitting their retirement accounts?
>> What I would say is there are a couple of things. If there's money that you need within the next couple of years, let's say two to three years that's in the market, you should take it out. Not because I expect the market to go any lower, but because you just can't afford the risk if that money is required to pay bills. And I say that whether we're in a a booming bull market or a difficult market like we're in now. If you need money short-term, it should not be invested in stocks. It should be somewhere safe.
For the money that is not required immediately, you know, it's important to remember that bare markets happen. They happen fairly regularly. When they happen, the average bare market only lasts 9 months. Now, there's no guarantee that it's going to be nine months the next time we hit a bare market if if in fact this becomes one. But generally speaking, they don't last years and years and years. You know, a bare market that lasts a year and a half is is kind of long in the tooth. And so, while that would be a long year and a half, that would be not fun to be looking at your statements over those, you know, 9 to 18 months, let's say, it's certainly something that people can endure and they have endured before. Most most of us have. uh you know you just have to look at even the global financial crisis which was you know the worst bare market in most of our lifetimes and that turned around fairly quickly. Uh the dotcom collapse also turned around fairly quickly. You know it was rough going no doubt about it. It was scary but it did turn around. It's important to remember that every single bare market has been followed by a bull market with no exceptions. So again there's no guarantees of what happens in the next bare market. But if history is any guide, then they're short-lived and they bounce back and you you just have to have your eye on the prize, which is building your wealth for the long term.
>> Well, that is exactly what this list of three stocks you have for us today really focuses on of the stocks that might be getting hit a little bit right now, might be seeing some volatility right now, but once this conflict is over, these three may be some of the first to turn around. And Mark, I know these stocks were all in three different sectors. is what were you looking for in the specific stocks you're recommending today?
>> One of the reasons that I chose these stocks is because they have not been getting hit as hard as many others in including their sector. These are actually stocks in the worst performing sectors but have been the leaders. So when these sectors turn around, assuming that they turn around when the war ends, then these stocks theoretically should be the leaders in those categories.
Well, let's get right to that first stock that you are looking at and your list of three stocks set to benefit from the end of this Iran conflict.
>> So, the first one I want to talk about is Cityroup. Uh the ticker symbol is C and the financials have have been getting hit really really hard during uh during this conflict. Uh Croup, like I said, as well as the others have been leading the group and so stronger stock in a weak group. I'm not going to say it's a strong stock, but it's it's been hanging in there. So, yeah, outperform the other banks. It does report earnings uh on April 14th, so it's coming up and I'm expecting to see some pretty good news as far as improving margins. You know, Croup is not who most people think of when they think of the the big banks. You know, it's the JP Morgans, the Wells Fargo, the Bank of America. That's that's usually who people think of with the big Wall Street banks, the big investment banks. But where Cityroup really shines is in their their treasury uh services. So, the cash management. So, if you are a company and uh you need to have transactions, let's say you're based in London, yeah, JP Morgan is is is certainly going to be there for you. No doubt about it. But if you're in Mongolia, if you are in perhaps Saudi Arabia, if you're in, you know, pick any place in the world, that's really where Croup shines. They are in 95 countries. They're in places that a lot of these major banks are not. And it's a very sticky business. And as again energy comes back online as as you know supply the supply chain kind of uh you know gets back online there's going to be more and more activity with those treasury services forgroup all over the world. So I I really like it kind of the worst performers from a financial standpoint of the big banks. So there's a lot of room for improvement as a result. The valuation is quite low. So I think there's a lot to like here. you know, you're you're picking a stock that's that's been performing fairly well. So, to me, that's the market telling you that this company is about to turn itself around and should be a big winner when when this war ends and financial stocks start to to perform again.
>> Yeah, we've heard a few different times uh over the last few weeks about how hard the financial sector is getting hit. A lot of different credit card companies really getting hit hard right now during this conflict. The question I have is why? Why are we seeing such an impact in this sector as a whole, not just Croup? And again, like you said, Cityroup isn't affected nearly as much as some of these other financial companies, really big names out there that have been hit down almost 20% over the last few weeks during this conflict. What's the connection here?
>> Well, with the the, you know, skyhigh price of oil, that is certainly a concern that that's going to slow the economy down. If the economy is is slowed down or even goes into recession, there's less borrowing. Uh so that's going to be a big part of it. Certainly less uh less invest in investment banking business to be done, fewer IPOs likely if the market is weak. So uh so it it would not be a good thing for the banks if this war continues for a while and oil prices stay high.
Would you expect to see an immediate turnaround as soon as the conflict is over or is it really maybe a slower turnaround waiting for that economy to react to really the end of the conflict, the change in those oil prices, things like that? What is your timeline do you think as far as when the conflict ends the financial sector and especially stocks like Croup might be seeing more of an impact?
I expect it to rebound very quickly and if it doesn't to me that would be a bit of a tell that perhaps the economy the global economy is not about to bounce as quickly as you would expect. So I I think that'll be a very good signal to uh to us to the world about what the economy is likely to do because the markets are generally forward-looking mechanisms. So if financial stocks quickly rebound uh that's probably a good sign that things are going to to come back to normal. If they don't, then we could be in for a little bit of a of a slog uh you know economically.
>> All right, very good first stock and first sector to look at. Let's move on to the second area that you are looking at for a turnaround once this Iran conflict ends.
>> Sure. So the next one is Verizon and this is actually a stock that I have in the Oxford Income letter which is my dividend investing letter and and one of the big reasons is because it has a very big yield. It's 5.7%. tough to find unless you're talking about REITs or MLPS. You know, just for a regular corporation, a 5.7% yield is outstanding. And and the stock actually has been on a on a pretty good run. It had strong earnings in January and spiked. U so after that initial move from the earnings, it's it's kind of treaded water for uh a month or so. You're still getting that 5.7% yield. They've raised their dividend every year for 21 years. So pretty good chance that they're going to raise their dividend again. their their cash flow more than covers their dividend. They're paying out about 50% of their free cash flow in dividends. So, plenty of room to continue to raise that dividend. But the communication sector again not performing well, Verizon has been one of the leaders in that sector uh since the war began. And if rates do come down, if the economy kind of returns to normal, interest rates settle down, uh there's going to be, you know, a lot more money for uh the consumer. And Verizon is typically one of the highest priced products and services within the telecom space. So an easier time for the consumer is going to be better for Verizon. They're likely to buy those premium products and services. Uh and so theoretically, uh the government could start spending again on infrastructure if they're not putting so many so much resources towards the war. And Verizon just bought Frontier Communications, which specializes in rural communities and uh rural internet. So again, if the government were to open its purse strings uh to help build out rural internet infrastructure, that could be a big big win for Verizon.
>> That's an interesting theory, too, that once the conflict and the war is over, the government has more funds to use on buildouts and infrastructure and other areas of spend rather than on defense right now. So that's a really interesting thesis for why Verizon might see an increase after the war. Uh kind of similar question to what I had last time too is why is the communication sector specifically getting hit right now because of this Iran conflict? Why are is this one area that we've seen um impacted so much? And like you said, Verizon the strongest one for sure in this sector that that earnings report has really helped carry it well through the the volatility that we've seen, but the sector as a whole is down. Why is that?
Well, I I do think it's because the consumer is is feeling unsure. So, you know, they they may be uh scaling back on the amount of data that they're purchasing or again some of these premium products and services. I mean, a cell phone uh today has has become an absolute necessity. So, most people are going to have their phone, have some kind of service. Uh but depending on their financial situation and their outlook, they may be looking for cheaper alternatives. And as we said, Verizon is is kind of the premium, the higher price service. So, uh, in in times of economic stress, um, that's likely that they're they're people are looking for the cheapest alternatives. So, again, another reason why I think Verizon specifically will be quick to rebound as people become a little bit more positive on the economic outlook.
>> Now, looking at both of these first two stocks you talked about, Croup and Verizon, these are both solid companies, familiar names. They both carry dividends and their um upside forecast isn't that huge. You look at what the analysts are saying, the consensus price target, there's not a huge amount of gains um expected for both of these companies. So talk about that that side of your strategy for investing. Mark, I think this is important for investors who are looking to build out that solid balanced portfolio long term. Um what are you looking at when it comes to upside for stocks like this?
>> My immediate answer is I don't care what the analysts think or what their especially what their price targets are. price targets are meaningless and I used to be a sellside analyst so I can say with absolute certainty that analyst price targets are meaningless and in fact I prefer to go against the consensus when I can when it makes sense. So if if if analysts are are bearish on a stock and I happen to be bullish it makes me you know even more confident that I'm going to be right because analysts generally don't like to stick their necks out. They don't want to have to tell their research director why they were the only one on the street with a buy recommendation when everybody else had a a, you know, sell or a neutral rating in case they're wrong. Uh, it it's very much a group think type dynamic. So, uh, I'm not worried about that. And and in fact, when Verizon was trading, you know, at high30s, low 40s, um, nobody was talking about it and now the stock is is close to 50. So that that's just a perfect example of why I don't care what the analysts say. They're always late to the party. They'll raise their estimates. They'll raise their ratings once the company has already beaten their earnings expectations and raised their guidance and and the stock is up, you know, 25 30%. So I wouldn't even look at what the analysts are doing or saying except for the fact that when they do upgrade a stock, uh, it can move the stock. So again, another reason to appreciate when most of them are uh neutral or bearish because then that upgrade can be another catalyst for the stock once they come on board.
>> Yeah, great answer and also fun to hear your perspective on building a portfolio that's really going to build wealth for you in your retirement. If you want to learn more about Mark's strategy for a wealthy retirement, make sure to check out this program. It's a free sign up right now. You can scan the QR code or follow the link in the description to sign up for the wealthy retirement newsletter from Mark and his team at the Oxford Club. Mark, we've got one more stock to cover in a totally different sector. What's that third name that you're looking to uh see some growth after the end of this conflict?
So, a sector that's been getting hammered and for obvious reasons is the airline industry and Delta Airlines uh just like the other two has been hanging in there and and kind of leading the pack in a very difficult sector. Delta, you know, arguably the best domestic airline. I fly internationally, but as far as airlines based in the United States, arguably the best. They do have a small dividend, 1.1%. That's not why we're why we're in it, but you know, it's nice to have. But earnings this year, and that's even with the expectations from uh this uh this conflict, are expected to grow 20% this year. But here's the the really interesting thing about Delta and why earnings are expected to grow. They have their own refinery. They're the only airline in America has their own oil refinery. So, their cost for jet fuel is much lower than the others. I mean, the inputs into that refinery still are certainly going higher. The the price of oil is certainly higher, but the cost to refine it is way lower than most other airlines because that's, you know, refineries make a nice profit when they uh refine the oil and send it off as jet fuel and other things. The other really interesting thing here is these refineries, they separate the oil. They make jet fuel and then they make diesel. For the most part, Delta doesn't need diesel and diesel prices have gone through the roof. So, they're able to sell or trade this diesel for jet fuel. So, I saw one analyst talking about that they actually might be making more in diesel than they're actually saving on the jet fuel side. So, this refinery is really really uh you know a bit of a a lifesaver for them. And in fact, in 2022, when Russia invaded Ukraine and oil prices spiked, the refinery saved Delta Airlines $800 million that year. So, this is a this is something that really moves the needle for them when we have a situation just like this. So, earnings are expected to grow. I mentioned 20% this year over the next three years, 57%. So, this is really expected to be a strong earnings grower. We're still seeing strong demand for flights. I mean, I don't know the last time I've been on a flight where there were many empty seats, uh, you know, or any empty seats for that matter. It still trades at a pretty low PE. So, it's trading at 11 PE again with 20% earnings growth this year and 57% over the next three years. So, that's really, really cheap. Price to sales is below one at 0.7. So, uh, this is, I think, uh, to me, this one is a no-brainer if you expect airlines to turn around as as I do.
>> Yeah, solid argument for this very solid company that's again been around for a while and continues to perform well no matter what is happening in the world. Thank you so much for this list today, Mark, of these three companies that could see a big turnaround when this conflict ends. I know in our last video together you talked about the energy sector and these three names are far less familiar. You can catch that video and our last list with Mark.