Although it may feel to many like the Russia-Ukraine War could last for a decade, the Rand Corporation, a prominent American think tank, recently outlined several scenarios that could cause the war to end relatively soon. Among these events are Russian President Putin falling from power and the collapse of the Russian Army. Additionally, I would add that there are signs that the support for Ukraine in European nations is waning significantly, and that could force the EU and the U.S. to seek a peace deal sooner than many expect. If the war does end or appears to be winding down sooner than the Street anticipates, the sectors whose products utilize large amounts of oil and/or natural gas are likely to get the biggest lifts. Here are three stocks to buy within three such sectors.
Travel is already booming. But the huge drop in oil prices triggered by an end to the Russia-Ukraine War would lower the cost of airline tickets a great deal. As a result, the travel boom would strengthen and last for a longer time. Of course, that would be great news for Expedia (NASDAQ:EXPE), the gigantic online travel agency.
Additionally, lower gasoline prices, in general, would give consumers globally more disposable income to spend on travel, greatly lifting the demand for Expedia’s travel deals.
Also noteworthy is that an end to the Russia-Ukraine War would lower gasoline prices in Europe more than in most other areas, giving tens of millions of Europeans the ability to travel more extensively.
The forward price-earnings ratio of EXPE stock is a rather low 12.4, making EXPE among the top stocks to buy even if the war doesn’t end anytime soon.
Cleveland Cliffs (CLF)
Cleveland Cliffs (NYSE:CLF) says that it “is the largest supplier of automotive steel in the US.” If the Russia-Ukraine War ends, resulting in a large decline in oil and gasoline prices, the demand for automobiles in general and steel-intensive SUVs, in particular, will likely surge tremendously, greatly boosting Cleveland Cliffs’ financial results and providing CLF stock with a big lift.
Moreover, since significant amounts of fossil fuel are used to make steel, Cleveland Cliffs’ raw material costs should drop meaningfully when the Russia-Ukraine War ends, significantly lifting its margins and its bottom line. Thus, CLF is one of the top stocks to buy if the war in Ukraine ends.
Also noteworthy is that CLF should be meaningfully helped by Washington’s spending on infrastructure that’s being unleashed by the Bipartisan Infrastructure Law.
On Jan. 12, Morgan Stanley upgraded CLF stock to “overweight” from “equal weight,” citing the company’s recent price hikes.
Finally, the shares have a very attractive forward price-earnings ratio of just 9.5, while their price-sales ratio is a minuscule 0.47.
You may have seen this one coming since I mentioned earlier that “the demand for automobiles in general and steel-intensive large vehicles, in particular, will likely surge tremendously” if the war ends. Indeed, if such a scenario unfolds, it definitely makes sense to buy the shares of Ford (NYSE:F), which manufactures America’s most popular pickup truck, the F150.
In December, showing that lower gasoline prices are already greatly increasing F150 sales, Ford’s sales of the pickups jumped 20% year-over-year to over 75,000. For the year, however, the truck’s sales dropped 10%. If the war ends, causing oil prices to tumble, the pent-up demand for F150s is likely to be huge.
Additionally, Ford could be boosted going forward by improved macroeconomic conditions in Europe, particularly if the war winds down, and by China’s reopening.
And changing hands at a very low forward price-earnings ratio of just 6.9 times, F stock is a bargain at its current levels.
On the date of publication, Larry Ramer 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.