The United States escalated its military involvement in Syria on Thursday, with President Donald Trump ordering a missile strike against a Syrian air base. The base was said to be responsible for a chemical weapons attack involving sarin, a banned nerve agent.
Said Trump: “Years of previous attempts at changing (Syria President Bashar Hafez al-Assad’s) behavior have all failed and failed very dramatically.”
The conflict in Syria initially rattled investors, and uncertainty again appears to be creeping into the markets. Reports that the strike was just a “one-off” attack are helping settle some nerves, but nonetheless, investors are looking for safety. As a good for-instance, gold — as measured by the SPDR Gold Trust (ETF) (NYSEARCA:GLD) — ticked more than 1% higher. Oil is heading higher this morning, too.
However, for those looking for a longer-term investment, there are a number of stocks that are likely to weather a bumpy ride for the markets should the conflict in Syria continue (and even escalate).
Here’s a look at three stocks that investors could pour into for safety, each of which play a different aspect of this developing geopolitical situation.
Stocks That Aren’t Sweating Syria: Raytheon Company
Raytheon Company (NYSE:RTN) spiked initially on Friday, and why not? The 59 cruise missiles used in the attack were made by the defense contractor’s subsidiary, Raytheon Missile Systems Co., in Tuscon, Arizona.
While the defense sector as a whole is rising in the wake of the strike, and likely will continue to improve if matters escalate, Raytheon appears to be a very direct player in the early going.
But more broadly speaking, RTN is a to bet when it comes to aerospace & defense plays. The majority of Raytheon’s sales come from government contracts, so when the military makes a move, Raytheon likely is cashing a check. Considering that Trump is seeking a “historic” boost to U.S. military spending, that can only bode well for this particular play.
Also of interest: Raytheon sports a cybersecurity business that has been growing exponentially in recent quarters. This is an important opportunity for expansion, and a logical “next thing” as hacking and cyber warfare become increasingly intertwined with defense.
Stocks That Aren’t Sweating Syria: Total SA (TOT)
The conflict in Syria is also providing a boost to oil prices, which is the typical response to geopolitical and military conflicts in the Middle East.
Naturally, most oil stocks will benefit from any higher prices, for as long as they stick around. But when investors typically think about where to invest — especially on the safe and secure side — they tend to think of blue chips like Exxon Mobil Corporation (NYSE:XOM) or Chevron Corporation (NYSE:CVX)
However, French oil and gas giant Total SA (ADR) (NYSE:TOT) — whose operations span it all, from E&P to transportation to marketing, not to mention chemical manufacturing — will also benefit from a spike in prices. Total has been able to cut its costs to the point where $50/barrel oil isn’t a death omen, and the company has actually managed to head higher over the past few months while its American mega-cap counterparts have slipped alongside sliding prices.
Total SA is unlike Exxon and Chevron in that its dividend is variable, but it’s still generous, with its past four payouts translating into a yield of more than 5%.
Total is about as strong an energy play as you could want, Syrian conflict or not.
Stocks That Aren’t Sweating Syria: Procter & Gamble (PG)
The last play is the stereotypical safety play. In times of trouble, investors flock to a number of things — gold, bonds and, of course, no-doubt dividend stocks, especially in the consumer staples and utilities sectors.
Procter & Gamble Co (NYSE:PG) — the hugely diversified consumer products company whose offerings include Bounty paper towels, Tide laundry detergent, Pampers diapers and Charmin toilet paper — falls into the former category.
In times of trouble, investors flock to the likes of Procter & Gamble because they sell products that people will need no matter what the economy or the rest of the world is doing. Thus, their investments will be protected, and their dividends assured. P&G currently yields around 3%, and it has improved upon its payout every year without interruption for six decades.
P&G doesn’t directly benefit from the Syrian conflict in any way — it’s simply a play on investor fear, and their search for dependable safe havens.
As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.
