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“War is the health of the state.” ~ Randolph Bourne
The guy who said that could as easily have said…
“War is the health of the stock market”… which is true, if you’re in the right sectors.
Today you’re going to get 5 ways to buy the sectors benefiting most from the war in Ukraine.
Right now (late October) all of these sectors are ranked in the top 13 out of 45 groups we track.
If this feels like “war profiteering,” remember – we can’t say for sure these sectors are strong because of the Ukraine war.
And if I showed you why Apple, Walmart or Nike have generated their billions in profits, you’d probably feel the same. This is about making money and not about anything else.
What we do know for certain is that money managers at giant institutions are accumulating positions in these 5 groups.
Sector #1 – Agriculture/Chemicals
Ukraine is the fourth-largest exporter of wheat, with export volume reaching over 24 million metric tons.
But since Russia invaded, much of that grain has been stuck in the war-torn country, thanks to crippled railways and closed ports in the Black Sea.
This graphic shows how exports have been affected in 2022 (see the orange bars).
A sector closely tied to agriculture is Chemicals. This is because chemicals figure heavily in fertilizers and pesticides.
Right now the Chemicals sector is ranked #6 of the 45 sectors we track on our Sector Prophets Pro platform. (The arrows point to the 5 sectors we’ll be discussing. I’ll only flash this image once. But I want you to see where the sectors rank.)
To gain bullish exposure to this sector, you can buy the Invesco Water Resources ETF (PHO).
Sector #2 – Aerospace Airlines
It’s practically a cliche that war is great for the defense industry and related industries. In fact, the Pentagon has a multi-year plan to rearm Ukraine and integrate it into NATO.
(This is what Randolph Bourne meant when he called war “the health of the state.”)
Right now the Aerospace Airlines sector is ranked 13th on our Sector Relative Strength Matrix.
Like with the Chemicals sector, it’s emerging out of oversold territory, with plenty of room to run higher.
The ETF you should look at here is the SPDR S&P Aerospace & Defense ETF (XAR).
Sector #3 – Oil Service
(Part of the #1 broad Energy sector)
You probably already know how Russia’s invasion (and its moves to deprive Europe of gas and electricity) has impacted the global energy market.
What you might not know is that the Oil Service sector has been ranked #1 for almost three weeks (again, see the Matrix, above).
As you can see on this Relative Strength chart (which shows the performance of the sector versus the weir market), Oil Service is crushing it right now.
(We know that the sector is doing better than the stock market as a whole, because the current column on the chart – the highlighted one at the far right, is a column of X’s.)
The ETF to look at is: iShares U.S. Energy ETF (IYE).
Sector #4 – Oil & Coal
This sector is currently ranked #2, just behind Oil Service.
And just like Oil Service, Oil & Coal is crushing the wider market.
We like Invesco Dynamic Energy Exploration & Production ETF (PXE).
Sector #5 – Utility Gas
This sector is ranked #5 out of 45 and is also outperforming the wider stock market on a relative strength basis. (Again, notice that the most recent column is X’s.)
We like the iShares U.S. Utilities ETF (IDU).
There you have it! Thanks for reading.
For more trading ideas visit TMIfree.com and sign up to receive my free newsletter.
Trade Safely,
Chris Rowe
Founder and CEO, True Market Insiders
“You see it in the price before you see it in the news.”
Founder of True Market Insiders, Chris Rowe, has been involved with some of the most dynamic companies to emerge from the financial services sector.
Working within the financial services industry since 1995, Chris held various senior positions at money management and investment banking firms where he served high-net worth and institutional investors.
Since 1996, he has been analyzing and managing investment portfolios of publicly traded equities, debt securities, derivatives, options, commodities and private securities. Since 2003, he has been publishing financial analysis, education and editorial.
He consulted for large hedge funds identifying attractive investment opportunities, writing reports and helping them hedge positions.
He was an active underwriter of both initial public offerings and secondary/follow-on offerings, some of which acted as the investment banker placing angel investors’ money into the private placements.
Chris Rowe currently is the CIO of Rowe Wealth Management, a registered investment advisory firm. He is the non-executive chairman of True Market Insiders.
