Will the war between Israel and Hamas spread? If it does, that would cause oil prices to spike. But our “Flying Five” stocks are positioned to do well in the face of rising world conflict. The list includes Caterpillar (CAT), the construction giant, recounts Mark Skousen, editor of Forecasts & Strategies.
Some energy experts expect the United States to begin tightening sanctions enforcement against Iran, potentially taking hundreds of thousands of barrels out of the oil market. In retaliation, Iran might block the Strait of Hormuz, a passageway from the Persian Gulf to the open ocean that handles 17 million barrels of oil exports per day.
“In that case, you’re well above $100 for oil,” says Rebecca Babin, a senior energy trader at CIBC Private Wealth US.
Oil recently stood at around $86 a barrel. Our oil stocks continue to rise, with Chevron (CVX) ahead 6% since July. Meanwhile, the aerospace division of Honeywell International (HON) will benefit from increased contracts with the federal government. It announced an increase in its dividend to $1.08 a share, with an ex-dividend date of Nov. 8.
As for CAT, it will pay out a dividend of $1.30 on Oct. 20. This is an increase from last year’s quarterly dividend of $1.20.
Overall, Caterpillar is a steady growth stock, with revenues and earnings growing year over year for 10 straight quarters thanks to cost-saving actions and solid market demand for its products, offsetting the supply-chain shortages.
According to Zacks Research: “The Construction Industries segment is expected to benefit from the rising construction activities in the United States and other parts of the world. Backed by demand for commodities fueled by the energy-transition trend, a thriving mining sector will aid the Resource Industries segment.”
The stock has been approaching a double-digit-percentage gain since July.
Recommended Action: Buy CAT.