According to President Joe Biden, a Russian invasion of Ukraine may be imminent. This fear has weighed down markets in recent trading days, with investors worried about what global conflict could mean for their portfolios. If you find yourself looking for protection amid uncertainty, what are the stocks to sell now?
As Peter Oppenheimer, the chief global equity strategist for Goldman Sachs, tells it, an invasion would lead to a significant market pullback. Specifically, companies that are heavily independent on Russian exports and imports will feel the pinch in their revenue streams. Such firms will feel the heat as well from the U.S. imposing economic sanctions on Russia.
With this in mind, here are five stocks to sell if you believe Russia will invade Ukraine.
- Caterpillar (NYSE:CAT)
- Deere & Company (NYSE:DE)
- Dover (NYSE:DOV)
- Dow (NYSE:DOW)
- Intel (NASDAQ:INTC)
Stocks to Sell: Caterpillar (CAT)
One of the best-known names in the heavy equipment space, Caterpillar, has struggled this year. When a manufacturing renaissance was on America’s horizon, experts counted it among the potential winners of the Build Back Better boom. Unfortunately for CAT stock, the stalling of the bill has squashed the short-lived market momentum.
Now the company is facing new pressure as Russian sanctions loom. Caterpillar has been in business with Russia since 1973. As the company’s websites lays out, it distributes parts in Moscow and conducts manufacturing operations in Tosno. Russia has created a lucrative market for the machinery producer.
Unfortunately, the compromising of U.S.-Russia trade relations will certainly affect a prominent U.S. company with such strong ties to Russia.
In 2012, former CAT CEO Doug Oberhelman stated that he thought Russia could become the company’s top export market. While that may not have happened, Caterpillar’s ties to Russia remain clear. If you believe the conflict will worsen, CAT is certainly a stock to sell.
Deere & Company (DE)
Home of the iconic brand John Deere, Deere & Company is an industrial equipment producer with a story similar to Caterpillar’s. That isn’t surprising when we consider that the machinery and mechanical appliances sector comprised more than 30% of U.S. exports to Russia in 2020. Deere has had a presence in Russia for even longer than Caterpillar, with ties to the country that date back more than 130 years. In 2018, the company announced plans to expand its Russian operations to include the farm equipment, forestry and construction sectors.
Russian export revenue isn’t the only aspect of a potential invasion that could threaten DE stock prices. The company primarily deals in large farming equipment. This conflict is already leading to supply chain disruptions — and agriculture is certainly not immune. It was reported in September 2021 that agribusiness was one of the most promising sectors of Ukraine’s economy. A conflict with Russia will disrupt that, threatening sales of agriculture tools and equipment. Both Russia and Ukraine are important fertilizer producers, which likely means further disruptions for farmers across the globe.
All signs point to a bleak outlook for DE stock.
Stocks to Sell: Dover (DOV)
Just over one month ago, Dover was listed among 2021’s best-performing stocks of the S&P 500. This year is already off to a vastly different start.
Like its peers on this list of stocks to sell, Dover primarily deals in equipment production. And multiple annual reports and U.S. Securities and Exchange Commission (SEC) filings reveal that the company has sales and operations in Russia. In these filings, Dover makes clear that any sort of political, economic or currency risk in Russia would pose a threat to its business.
Granted, Dover does have a more diversified business. These other endeavors will help it escape some of the heat — but savvy investors would be wise to look elsewhere for now.
Dow (DOW)
Chemicals, plastics and leather products make up the second largest group on the list of U.S. exports to Russia.
This prominent chemical company producers therefore earns a spot on this list. According to its website, Dow has had a growing presence in Russia for 40 years, providing primarily for the country’s downstream industries such as oil and gas. It has two manufacturing facilities in Russia and maintains offices in both Moscow and Kyiv.
Dow has had a better month than most stocks to sell on this list, but that doesn’t mean it isn’t facing difficult times. Any company with such strong ties to Russia will be compromised, and Dow has dealings in business ties to Ukraine too.
Stocks to Sell: Intel Corporation (INTC)
It’s not only companies with high Russian exports that are facing a scary future. Any business that is heavily dependent on materials imported from Russia will also see operations compromised if sanctions are implemented. The chip-making industry was already battling supply chain disruptions, but this negative trend will get worse in the event of a Russia-Ukraine war. Intel is the largest chip producer in the U.S. While it has already been named to lists of stocks to sell and avoid due to its most recent earnings report, this international crisis is about to make things a lot worse.
As Protocol reports, Russia is a leading producer of both neon and palladium, two elements that are vital for chip production. It gets worse from there. Chip makers are also reliant on neon which is often sourced from Ukraine.
Things are looking so grim for chipmakers that Peter Harrell of the White House National Security Council has urged them to find “alternative sources.” However, there’s no guarantee that chipmakers will be able to do that and if they can’t, they face a highly uncertain future. As one of the industry’s leaders, Intel has the furthest to fall.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
