With the potential threat of nuclear weapons in North Korea pushed to the sidelines, Washington is shifting more of its focus onto Iran. Which is a good thing, because the threat level in the Middle East is running ever higher.
According to the New York Times, American officials who have assessed Iran's possible responses to any attack by Israel on its nuclear program believe Iran would almost certainly retaliate by launching missiles on Israel.
The secondary threat, and primary to U.S. officials, are supplemental and "terrorist-style attacks on United States civilian and military personnel overseas." More specially, they believe petroleum infrastructure in the Persian Gulf and American troops in Afghanistan would be targeted.
"The Iranians have been pretty good masters of escalation control," said Gen. James E. Cartwright, who was the top officer at Strategic Command and, as vice chairman of the Joint Chiefs of Staff, participated in war games involving both deterrence and retaliation on potential adversaries like Iran.
Of course, it is difficult to delve into the minds of leaders in Israel and Tehran, especially in the "heat of conflict." The U.S. can only provide their best assessment. For more as reported by the New York Times, click here.
In the event of an attack from Israel, Iran could and likely will try to block the Strait of Hormuz, which would greatly unsettle oil markets.
The Strait is a main route for oil in the gulf, and the market is well aware of the high stakes posed by closing the strait. Many believe $100 barrels will become the floor under the "new normal" for the oil market.
Business section: Investing ideas
So, as the threats of a war escalate, the economy prepares for impact. Will this benefit U.S. oil companies? For ideas on how to invest on such a trend, we ran a screen on oil companies that have been boosted by bullish sentiment.
Specifically, we took the top 200 by market cap and looked at institutional and insider buying trends. The names below have seen net positive purchases on both accounts.
Do you think institutional buyers and company insiders are making the right call? (Click here to access free, interactive tools to analyze these ideas.)
1. Kinder Morgan Management
2. NuStar Energy: Engages in the terminalling, storage, and transportation of petroleum products primarily in the United States, Canada, the Netherlands, St. Oil & Gas Pipelines. Net institutional purchases in the current quarter at 2.9M shares, which represents about 5.42% of the company's float of 53.51M shares. Over the last six months, insiders were net buyers of 201,030 shares, which represents about 0.38% of the company's 53.51M share float
3. Energy XXI
4. Calumet Specialty Products Partners
6. Hercules Offshore
7. POSCO: Engages in the manufacture and sale of steel products in South Korea and internationally. Market cap of $28.42B. The stock has lost 10.51% over the last year
8. Shinhan Financial Group Company: Provides financial products and services to corporations, governments, institutions, and individuals in Korea and internationally. Market cap of $18.50B. The stock has lost 6.91% over the last year
9. SK Telecom Co.: Provides wireless telecommunications services using code division multiple access (CDMA) and wide-band CDMA technologies. Market cap of $9.34B. Offers a good dividend, and appears to have good liquidity to back it up -- dividend yield at 5.44%, current ratio at 1.43, and quick ratio at 1.41. The stock has lost 18.42% over the last year
10. Woori Finance Holdings Co.: Provides various banking and financial products and services in Korea. Market cap of $8.68B. This is a risky stock that is significantly more volatile than the overall market (beta = 2.19). The stock has lost 11.97% over the last year.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above.