Russia’s Crash Override Has Zero Cool
Great Ones, there are two wars going on right this very second.
The first one we all know about. How could we not? Russia’s invasion of Ukraine is plastered all over every financial and regular news media site in the world right now.
This “hot” war is expected to drastically impact oil and natural gas prices, potentially impact semiconductor production, provide an influx of revenue for defense-contractor companies and generally cause mayhem for the U.S. Federal Reserve.
(Yes, I know there are political and humanitarian impacts as well. It’s war, after all. But this is a financial publication, and I’m not delving into those murky waters here … except to say that I stand firmly with Ukraine.)
But there is a second war that’s about to kick off, and it won’t be limited to Russia or Ukraine’s borders. This war will be a cyberwar, conducted in that “series of tubes” we call the internet.
We all know Russia has a considerable stable of very capable hackers who have hit everything from banks to oil pipelines to national power grids to elections … and everything in between.
You can bet your bottom dollar that Russian hackers are going to go on the offensive after the latest round of anti-war sanctions.
In fact, Wedbush Analyst Dan Ives had this to say over the weekend:
U.S. banking institutions and utility companies are already preparing for the worst, with U.S. officials noting that preparations began back in November for “any potential disruptions to our critical infrastructure and possible impacts to individuals and communities.”
Unfortunately, Russia is only one of the cyberwarfare players in this game. Anonymous — remember them? — came out this weekend and declared war on Russia.
Now, if you’ve followed the decentralized, international hacking collective since its 2003 debut, you know Anonymous is just as likely to hit domestic targets as it is to hit Russian targets.
We get it, Mr. Great Stuff … there’s a whole “Hack the planet!” vibe going on right now. So what?
So what? My dudes, this could be your opportunity to invest in cybersecurity stocks! That is, assuming you aren’t already … and, for that matter, why aren’t you?
My two favorite investments to benefit from the coming cyber-nightmare are security specialists CrowdStrike (Nasdaq: CRWD) and Palo Alto Networks (Nasdaq: PANW).
Y’all might remember CrowdStrike, as Great Stuff Picks readers banked a 314% gain on CRWD stock back in November.
The stock tanked back in November due to weaker-than-expected guidance for 2022, and we took profits.
However, with the rise of the Russian hacking threat, I now believe CrowdStrike will lift guidance and see considerably higher revenue this year.
And with CRWD down more than 30% from its November highs, we’re looking at a potential bargain investment.
As for Palo Alto Networks, PANW stock took a bit of a hit earlier this year as Wall Street ditched tech stocks due to so-called “risk off” investing fears. But the shares came surging back after stronger-than-expected quarterly results last week.
The Russian hacking threat only bolsters Palo Alto’s current outlook, making it another a solid investment choice for the coming cyber-storm.
Editor’s Note: About That Broad Market Meltdown…
Practically any stock that’s not an oil barren, defense contractor or cybersecurity company is falling in the wake of Russia’s frightful invasion.
Given the level of uncertainty swirling around the stock market, 2022 is shaping up to be a challenging year for even the most battle-hardened investors. But what if there was a way to make money from falling stocks when things get dicey?
I’m talking about a chance to nearly double your money every month on average … no matter which direction the market is headed next.
One analyst says it’s possible — but only with a proven defensive strategy.
Going: Toyota’s Total Hack Job
Somewhere, a top Toyota (NYSE: TM) executive is cursing themselves for not implementing the IT-recommended computer password that includes an uppercase number, a lowercase number, a haiku, a hieroglyph and three drops of holy water…
I’m not saying more of these “special characters” could’ve prevented the calculated cyberattack that shut down all 14 of Toyota’s Japanese factories this morning (Cyber specialists, don’t @ me), but damn if adding that extra exclamation mark doesn’t make you feel just a bit more protected from mayhem … amiright?
You have never been more wrong.
Technically, the exact cause of the carmaker’s computer plight is still unknown. But whatever bug crawled up Toyota’s tailpipe this morning, it was nasty enough to halt production of roughly 10,000 vehicles (or 5% of Toyota’s monthly output).
Now, Toyota has assured investors that all efforts are being made to strengthen the company’s supply chain and reignite the fires that all Toyota vehicles are forged in. And in all likelihood, we’re talking about a day of misplaced manufacturing — tops.
Lucky for Toyota, TM stock didn’t cool off nearly as much as its kilns, falling less than 1% on news of the cyber kerfuffle.
Going: Delta Don’t Play
They say all is fair in love and war … especially unprovoked wars that result in unnecessary human suffering.
Thanks to the tank-sized elephant in the room, Delta Air Lines (NYSE: DAL) is denying Russia’s national airline, Aeroflot, access to codeshare services that allow one airline to sell seats on a flight run by another carrier.
The move comes as many Baltic and European countries closed their airways to Aeroflot and other Russian airlines after Russia’s invasion of Ukraine. KLM Royal Dutch Airlines — one of Delta’s partners — also announced that it would cancel some of its services to Russia.
“We have decided at this time, given the uncertain situation, not to allow our crew to stay overnight in Russia,” said KLM Royal Dutch Airlines in a statement. “Therefore, it is not possible to carry out the night flight to Moscow.”
Reading between the lines, the statement reads as such: Ain’t nobody got time for a social pariah.
Now, Delta proper doesn’t fly planes to either Russia or Ukraine, so the codeshare collapse will likely have very little impact on the company’s bottom line — even in the near term.
In other words: All y’all Delta investors watching DAL stock drop 3% today, know that this downward shift is temporary and more a result of panic-selling than anything else.
And remember, it could always be worse. You could’ve invested in Aeroflot stock…
Gone: Oil Be Seeing You…
If you need more proof that severe actions have severe consequences … look no further than BP’s (NYSE: BP) cord-cutting of Russian-controlled oil barren Rosneft, which BP has a nearly 20% stake in.
BP issued a statement this morning saying that it would no longer “report reserves, production or profits from Rosneft” and that its chief executive, Bernard Looney, was jumping ship after serving on Rosneft’s board.
BP investors immediately panicked upon hearing the news, as divesting the company’s 19.75% stake — valued at $14 billion — could result in charges of $25 billion. It will also halve BP’s proven oil and gas reserves and wipe out a third of the company’s production.
Now, there’s no denying that BP’s decision will hurt in the short term. But remember, because BP is headquartered in Britain and does most of its business in Europe, it was going to rip the oil Band-Aid off eventually … and sooner rather than later.
Although, admittedly, this is probably sooner than anyone had in mind…
See, BP was already moving toward cleaner-energy solutions like biofuels and hydrogen power to comply with Europe’s green-energy legislation. Many European Union members are already banning or severely limiting the use of combustion engines, which means that oil’s days as top energy dog are inevitably numbered.
Russia’s invasion simply provides BP with a convenient excuse to turn tail early, meaning this pain will likely be short-lived. Today’s roughly 5% drop proves that investors feel similarly, since BP’s plummet-thon should’ve been much, much worse.
If any of you Great Ones have been looking to gain exposure into the growing global alternative energy market … BP might’ve inadvertently become one of your top investment choices.
And for all you other energy fiends with your oil-alternative dreams … check this out:
The surge in electric vehicle (EV) demand is also creating a surge in the materials critical to having these EVs come off the assembly line.
There’s only one company in the entire Western Hemisphere that supplies this critical material on such a large scale. And as EVs take over roadways all across America … they will rely on this material for future success.
After you check that out, be sure to write to us with this week’s hot takes and spit takes, earnings trades and options plays, rants, raves, questions … and everything in between.
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Until next time, stay Great!
Regards,
Joseph Hargett
Editor, Great Stuff