The stock market was able to shrug off the failed Wagner insurrection attempt at the weekend despite the dramatic images beamed worldwide. But if the presidency of Vladimir Putin fails it could boost energy as well as defense stocks, according to a Wall Street analyst.
A march on Moscow led by Wagner chief Yevgeny Prigozhin ended in farce when he announced he would stand down and his men return to their base camps. They stopped 125 miles short of the Russian capital before turning tail.
Prigozhin, who looks set to go into exile, has denied he was trying to overthrow Putin but remains under investigation by Russian officials over the uprising.
President Joe Biden on Monday denied Western involvement, while British foreign minister James Cleverly said the mutiny had exposed "clear cracks" in Russian support for the Ukraine war. Nevertheless, analysts noted a lack of enthusiasm for any particular side amid the insurrection attempt.
While crude oil initially popped as the struggle unfolded, it was back to trading under $70 per barrel on Monday. Gold was also nearly flat.
Defense stocks such as Lockheed Martin, Raytheon Technologies and General Dynamics were all in the red. Boeing was slightly up. The stock market itself was negative.
"The Wagner incident will likely remain broadly ignored by investors, unless there are fresh developments that could change the course of the war in Ukraine," Swissquote Bank senior analyst Ipek Ozkardeskaya said in a note to clients. "Until then, markets will be back to business as usual."
CFRA chief investment strategist Sam Stovall told IBD there will not be any impact on the market "unless Putin gets overthrown." If this occurs "oil prices will likely rise, along with defense stocks."
Navellier & Associates founder Louis Navellier said in a note to clients that the weekend action in Russia had "thrown more uncertainty on worldwide crude oil supplies." He also noted crude oil being transported at sea is falling, "which may be a sign that Russia's oil shipments to India and China may be waning."
Defense Stocks To Watch
Boeing stock sits below a flat base buy point of 221.33 after previously moving above the entry. It is currently testing support at the 50-day moving average.
Earnings are currently weak for the Dow Jones stock, but expectations of a turnaround have seen it rank among the top 13% of stocks in terms of price performance over the past 12 months.
Lockheed Martin is near consolidation lows as it forms a flat base. This is a second-stage pattern. It is shooting for an ideal entry point of 508.10.
Aggressive investors could use a move back above the 50-day moving average as an early buy point. But while the F-35 maker has a good EPS Rating of 81 out of 99, its stock market performance has been underwhelming of late.
Raytheon Technologies has formed a cup-with-handle base. The ideal buy point here is 100.68. It is a first-stage pattern, which means it is more likely to net big 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 is currently one of the best performers in the Aerospace/Defense industry group. It is one to watch for now as it is extended past a flat-base buy point of 772.01.
Overall strong performance has netted it a Composite Rating of 93. It is in the top 7% of issues in terms of stock market performance over the past 12 months. Earnings are seen swelling 44% in 2023, before popping 28% in 2024.
Earnings are also noteworthy. The firm saw EPS growth come in at an average 46% the past three quarters, which is excellent. Big Money has been a net buyer of late, with its Accumulation/Distribution Rating coming in at a solid B-.
Stock Market Energy Plays To Watch
In the consolidated oil stocks group, Shell sits near a consolidation pattern entry of 62.75. This is a first-stage base.
Overall performance is solid here, with its Composite Rating coming in at 85 out of 99. Earnings are also strong, with its EPS Rating sitting at 89 out of 99.
In the oil and gas machinery space, Weatherford is nearing a first-stage cup-with-handle buy point of 69.19. The handle could eventually evolve into a flat base.
Performance is excellent here, with its IBD Composite Rating coming in at a near-perfect 98. Both its earnings and stock market performance are stout.
Chart Industries sits in a buy zone above a consolidation entry of 152.50. It is clear of its major moving averages.
Big Money has been piling in of late, with its Accumulation/Distribution Rating sitting at A-, showing strong buying by funds. In total, 78% of its stock is held by funds.
Chart's earnings are seen soaring by 33% in 2023, before gushing a further 65% in 2024.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and stock market analysis.
