What War in the Holy Land Means for Your Portfolio

Israel is on fire.

The unprovoked attacks killed nearly a thousand innocent Israelis, with gunmen taking hostages.

Their goal is unclear… but our views shouldn’t be.

This was targeted murder, plain and simple.

Yet, instead of universal condemnation, the events shed light on the underbelly of antisemitism and the moral cavity buried deep within our institutions.

Larry Summers, a fairly liberal economist who worked in the Clinton and Obama administrations, took Harvard, his alma mater, to task for its feckless silence and disgusting student body response:

We simply cannot ignore the reality of what transpired…

…Hamas declared war on Israel.

That is what happened, and that’s what we need to prepare for right now — not in a few weeks when the dust settles.

And that’s why we’re introducing an idea Jim Woods put forward in Tuesday’s Eagle Eye Opener, his daily newsletter featuring rich market commentary and analysis.

Although stocks like Lockheed Martin (LMT) jumped by almost 10%, Jim was looking at a different kind of defense stock…

…one that’s cheaper than at any time since the pandemic.

The Best Offense is a Good Defense

When the world seems to be falling apart, investors often turn to safe havens. These are typically utility stocks, bonds, and consumer staples.

However, these traditional safety trades seem to have lost their charm.

As we wrote about in a recent issue of Wealth Whisperer, utility stocks, which are usually considered reliable during times of market turmoil, are now being referred to as “garbage”. Their performance has been underwhelming, to say the least.

Bonds, too, have been trading differently. After nearly two decades of a zero-interest rate environment, we’re facing a 10-year Treasury note yielding ~5%.

However, as Jim pointed out in the Eagle Eye Opener, consumer staples are extraordinarily cheap.

But not all are created equal.

It all started when Walmart said sales softened as consumer use of diet drugs like Ozempic spread.

Frankly, that’s a bigger load of crap than the port-a-johns at Burning Man.

Sales are soft because consumer spending is shrinking. Folks have worked through their pandemic savings, while wage growth hasn’t kept pace with inflation.

This chart explains why the consumer staples sector got clobbered over the last couple of months:

But as they say, every cloud has a silver lining.

These selloffs, though disheartening, create real buying opportunities for discerning investors who can spot undervalued stocks.

Our current favorites are Coca-Cola (KO) and Pepsi (PEP).

Coke’s international presence diversifies its risk, as does its expanding suite of beverages.

The company generates $9.3 billion in free cash flow — more than enough to pay out $7.6 billion in dividends, buy back $1.3 billion in stock and still pay down its debt.

For reference, the dividend and buyback provide a total yield of 3.9% annually.

Pepsi is not as well-known internationally. But it has got a stronger foothold in the snack foods arena.

The latest company results showed 10% organic growth with plenty of cash to cover its $7.1 billion dividend and $1.1 billion stock repurchase program — an annual yield of 3.7%.

Both companies are well-capitalized and trade at earnings multiples not seen since the pandemic.

Consumer staples are great and all… but what about energy stocks? They’ve been hotter than hot.

Shouldn’t the conflict boost oil prices?

Don’t Assume Anything

Initially, that’s what happened.

The price of oil jumped by 5% over the weekend.

However, oil stocks didn’t respond as favorably, and there’s a good reason why.

Higher oil prices increase transportation costs on everything from air travel to freight shipments.

And guess what that feeds into?

Our good old friend inflation.

When oil prices get too high, it creates “demand destruction,” where people forgo certain energy-related activities.

This occurs at roughly $90 a barrel.

So, the good news is that even as oil prices drive up inflation, it’s more of a one-and-done type of thing.

However, we’ll unlikely see oil hold up here given the Saudis’ extra production capacity they’re holding back.

At these prices, selling more oil becomes extremely attractive.

Stay Informed, Stay Prepared

In these volatile times, having a seasoned expert guiding your investment decisions can make all the difference.

This is where Jim Woods’ Eagle Eye Opener newsletter comes into play.

Jim Woods is a 30-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

His Eagle Eye Opener newsletter offers rich market commentary and analysis that helps you stay on top of trends and seize profitable opportunities.

As we face geopolitical tensions, economic uncertainties and a highly unpredictable market, Jim’s insights can be your beacon.

From identifying undervalued stocks like Coca-Cola (KO) and Pepsi (PEP) to decoding the implications of rising oil prices and inflation, Jim provides actionable advice to navigate through these complex scenarios.

The Eagle Eye Opener is not just about keeping you safe in a down market but also about finding hidden opportunities.

Even in the worst markets, you’ll know where there’s money to be made.

So why wait?

Arm yourself with the knowledge and tools you need to thrive in any market condition.

Subscribe to Jim Woods’ Eagle Eye Opener newsletter today and open up a world of new profit opportunities!