Profiting Off Putin's Play

Well, not his picks exactly, but with a Russian invasion of Ukraine “a distinct possibility” in February according to President Biden, investors can count on global markets continuing to fall. But while equities may lose across the board, there will be winners. 

Of all the sectors destined to fall should Russia invade; the agriculture and commodities sectors is where investors should look to make an aggressive bet on Russian aggression. Food prices are in focus, which have risen steadily since the pandemic. Both Russia and Ukraine are massive producers of wheat and grain. That production was set to set records this year by both nations. Now, with war on the horizon, wheat and grain production could fall sharply. Nothing increases supply chain disruptions like war. For some companies, like John Deere DE, such a supply chain disruption could present a unique opportunity to sell more seeds and equipment to farmers as the U.S. ratchets up its domestic wheat and grain production to fill the void. Investors may also want to keep an eye on United States Steel X and Calavo Growers CVGW, both of which could see a bounce on the imminent invasion. 

But the real money to be made off Putin’s play is in oil.  Global oil prices are set to soar on the war. How high? According to JPMorgan, oil prices could spike to as high as $150 per barrel. That would bode very badly for global GDP growth (which would fall to 0.9% annualized for the first half of 2022), but it would bode well for investors in oil and in oil companies. Should such a spike in oil occur, inflation globally could double to 7.2%. U.S. inflation already keeps rising, now at a 40 year high.  In energy, Devon Energy DVN and BP BP are two of my favorites to play on the Russian-Ukrainian situation. 

Stock Investing is a MARAthon, not a Sprint

And then there is crypto, which continues to get crushed on Russian and Chinese bans. The “sector,” seems to now rise and fall in tandem with global equities, and that’s a bad thing for crypto investors—and a worse thing when the invasion comes. 

But there is one play that crypto investors should consider. Marathon Digital MARA, which, according to Jefferies, is set to become the largest publicly traded bitcoin miner this year, is both profitable and promising. 

“We estimate that BTC BTC/USD will rise at a +32% CAGR (compound annual growth rate) through '24 and that MARA's revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) will rise at a +120% and +95% CAGR, respectively,” said Jeffries analyst Jonathan Petersen in a recent note. Peterson has a 12-month price target of $51. The stock is up nearly 7% as of midday Friday, trading at $21.60. In an uncertain market made even more uncertain by Putin’s play, such a bullish call on such a highly profitable company in such a popular space might be where investors can place an aggressive bet in 2022.



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