The stock market was able to ignore Wagner’s failed insurrection attempt over the weekend despite the dramatic images being broadcast around the world. But if Vladimir Putin’s presidency fails, it could boost energy as well as defense stocks, according to a Wall Street analyst.
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A march on Moscow led by Wagner leader Yevgeny Prigozhin ended in farce when he announced he would stand down and his men return to their base camps. They stopped 125 miles from the Russian capital before turning back.
Prigozhin, who appears set to go into exile, has denied trying to topple Putin but is still being investigated by Russian officials over the uprising.
President Joe Biden on Monday denied any Western involvement, while British Foreign Secretary James Cleverly said the mutiny exposed “clear cracks” in Russian support for the war in Ukraine. Nonetheless, analysts have noted a lack of enthusiasm for one particular party amid the attempted insurgency.
While crude oil initially flared up as the fight unfolded, it was back to $70 a barrel on Monday. Gold was also almost stable.
Defense stocks such as Lockheed Martin (LMT), Raytheon Technologies (RTX) and General dynamics (GD) were all in the red. Boeing (BA) was up slightly. The stock market itself was negative.
“The Wagner incident will likely remain largely ignored by investors unless there are new developments that could change the tide of the war in Ukraine,” said Swissquote Bank senior analyst Ipek Ozkardeskaya. , in a note to customers. “By then, markets will resume business as usual.”
CFRA’s chief investment strategist, Sam Stovall, told IBD there would be no impact on the market “unless Putin is toppled.” If that happens, “oil prices will likely rise, as well as defense stocks.”
Navellier & Associates founder Louis Navellier said in a note to clients that the weekend action in Russia had “rendered more uncertainty to the global supply of crude oil.” He also noted that crude oil transported offshore is falling, “which could be a sign that oil shipments from Russia to India and China may be declining.”
Defense actions to watch
Boeing stock is trading below a flat base buy point of 221.33 after previously breaking above entry. It is currently testing support at the 50-day moving average.
Earnings are currently weak for Dow Jones stock, but expectations of a turnaround have put it in the top 13% of stocks by price performance over the past 12 months.
Lockheed Martin is near consolidation lows as it forms a flat base. This is a second stage model. It is targeting an ideal entry point of 508.10.
Aggressive investors could use a return above the 50-day moving average as an early buy point. But while the F-35 maker has a strong EPS rating of 81 out of 99, its stock market performance has been disappointing lately.
Raytheon Technologies has formed a mug base with handle. The sweet spot here is 100.68. It is a first stage model, which means it is more likely to generate large gains.
Investors will want to see both the stock market and its price performance improve going forward. It holds an IBD composite rating of 73 out of 99.
transdigm (TD) is currently one of the most successful in the Aerospace/Defense industry group. That’s one to watch for now as it breaks above a fixed base buy point of 772.01.
A strong overall performance earned it a composite rating of 93. It is in the top 7% of issues by stock market performance over the past 12 months. Revenues are expected to rise 44% in 2023, before climbing 28% in 2024.
The gains are also notable. The company has seen EPS growth average 46% over the last three quarters, which is great. Big Money has been a net buyer lately, with its accumulation/distribution rating hitting a solid B-.
Stock market energy plays watch
In the group of consolidated oil stocks, Shell (SHEL) is near a consolidation pattern entry of 62.75. This is a basic first step.
Overall performance is strong here, with its composite rating of 85 out of 99. Earnings are also strong, with its EPS rating of 89 out of 99.
In the oil and gas machinery space, Weatherford (WFRD) is approaching a cup buy point with first leg handle of 69.19. The handle could eventually evolve into a flat base.
Performance is excellent here, with its IBD composite rating hitting a near-perfect 98. Its earnings and stock market performance are strong.
Industries Chart (GTLS) is in a buy zone above a consolidation entry of 152.50. It is clear from its main moving averages.
Big Money has been accumulating lately, with its accumulation/distribution rating standing at A-, showing strong buys by the funds. In total, 78% of its stock is held by funds.
Chart revenue is expected to climb 33% in 2023, before climbing another 65% in 2024.
Please follow Michael Larkin on Twitter at @IBD_MLarkin to learn more about growth stocks and stock market analysis.
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