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Oil Surge Continues on Escalating Middle East Crisis: 4 Defensive Picks
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Key Takeaways
COCO's expected earnings growth is 64.7%, with estimates up 10.7% in 60 days.
CHEF's expected earnings growth is 33.7%, while estimates improved 10% in 60 days.
ASMB and CDNA both expect more than 100% earnings growth, with estimates rising 20% and 35.2%.
Oil prices are on the rise once again as tensions continue to escalate in the Middle East. Markets have remained volatile for most of July and August, and the situation has worsened this month, with both the Dow and S&P 500 in the red.
Investors are also awaiting the August fresh inflation print, which they fear could rise again on higher oil prices. This has raised concerns that the Federal Reserve could announce a rate hike in its policy meeting next month.
With no signs of the tensions easing in the Middle East, investors have already been rotating out of riskier assets and taking refuge in defensive areas of the market.
Given this scenario, we recommend buying four defensive stocks from the consumer staples, and healthcare sectors, namely, The Vita Coco Company, Inc. (COCO - Free Report) , The Chefs' Warehouse, Inc. (CHEF - Free Report) , Assembly Biosciences, Inc. (ASMB - Free Report) and CareDx, Inc. (CDNA - Free Report) .
Surging Oil Prices Weigh on Markets
Oil prices jumped for the sixth straight day on Tuesday, as tensions escalated further in the Middle East. The United States and Iran continue to attack each other, with neither nation in any mood to resume peace talks.
The West Texas Intermediate futures jumped for the sixth consecutive day, recording its longest stretch of rises since a seven-day rally back in March when the war began. The jump in energy prices has raised fears among investors that inflation could rise again after easing over the past two months.
This has turned their focus to fresh inflation data set to be released later this week. The Dow and the S&P 500 are already down 0.8% and 0.2% month to date, respectively.
The Federal Reserve has kept interest rates unchanged since last year despite a rise in inflation. However, investors are expecting the Federal Reserve to hike interest rates by a quarter percentage point next month in its FOMC meeting.
Also, hotter-than-expected August jobs data has further strengthened the chances for an interest rate hike by the Federal Reserve. Higher prices and borrowing rates have already been weighing on consumers and the broader economy. Another rate hike could keep markets volatile for a longer period.
4 Defensive Stocks With Upside
The Vita Coco Company
The Vita Coco Company, Inc. provides a beverage platform. COCO’s brands include coconut water, Vita Coco; clean energy drink Runa; sustainable enhanced water, Ever & Ever, and protein-infused water, PWR LIFT.
The Vita Coco Company’s expected earnings growth rate for the current year is 64.7%. The Zacks Consensus Estimate for current-year earnings has improved 10.7% over the past 60 days. COCO currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chefs' Warehouse
The Chefs' Warehouse, Inc. is a distributor of specialty food products in the United States. CHEF is focused on serving the specific needs of chefs who own and operate restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools and specialty food stores.
CHEF’s Warehouse’sexpected earnings growth rate for the current year is 33.7%. The Zacks Consensus Estimate for the current-year earnings has improved 10% over the past 60 days. CHEF has a Zacks Rank #2 (Buy).
Assembly Biosciences
Assembly Biosciences, Inc. develops therapies for infectious diseases and other disorders of the gastrointestinal (GI) system. Assembly's product portfolio consists of two late-stage assets: VEN 307 for relief from pain associated with anal fissures and VEN 308 for the treatment of fecal incontinence. ASMB is also developing novel microbiome-based technology for targeted oral delivery of therapeutic bacteria, complex proteins, viral antigens and small molecules to treat intractable infectious diseases of the GI tract, such as C. difficile infections.
Assembly Biosciences’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 20% over the past 60 days. ASMB currently has a Zacks Rank #1.
CareDx
CareDx, Inc. develops, markets and delivers a diagnostic surveillance solution for heart transplant recipients. CDNA provides AlloMap, a noninvasive blood test used to aid in the identification of heart transplant recipients. It is also pursuing other areas of transplant surveillance, such as the use of cell-free DNA (cfDNA) as a biomarker for rejection.
CareDx’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 35.2% over the past 60 days. Currently, CDNA has a Zacks Rank #1.
View the Zacks #1 Rank List
Image: Bigstock
Oil Surge Continues on Escalating Middle East Crisis: 4 Defensive Picks
Key Takeaways
Oil prices are on the rise once again as tensions continue to escalate in the Middle East. Markets have remained volatile for most of July and August, and the situation has worsened this month, with both the Dow and S&P 500 in the red.
Investors are also awaiting the August fresh inflation print, which they fear could rise again on higher oil prices. This has raised concerns that the Federal Reserve could announce a rate hike in its policy meeting next month.
With no signs of the tensions easing in the Middle East, investors have already been rotating out of riskier assets and taking refuge in defensive areas of the market.
Given this scenario, we recommend buying four defensive stocks from the consumer staples, and healthcare sectors, namely, The Vita Coco Company, Inc. (COCO - Free Report) , The Chefs' Warehouse, Inc. (CHEF - Free Report) , Assembly Biosciences, Inc. (ASMB - Free Report) and CareDx, Inc. (CDNA - Free Report) .
Surging Oil Prices Weigh on Markets
Oil prices jumped for the sixth straight day on Tuesday, as tensions escalated further in the Middle East. The United States and Iran continue to attack each other, with neither nation in any mood to resume peace talks.
The West Texas Intermediate futures jumped for the sixth consecutive day, recording its longest stretch of rises since a seven-day rally back in March when the war began. The jump in energy prices has raised fears among investors that inflation could rise again after easing over the past two months.
This has turned their focus to fresh inflation data set to be released later this week. The Dow and the S&P 500 are already down 0.8% and 0.2% month to date, respectively.
The Federal Reserve has kept interest rates unchanged since last year despite a rise in inflation. However, investors are expecting the Federal Reserve to hike interest rates by a quarter percentage point next month in its FOMC meeting.
Also, hotter-than-expected August jobs data has further strengthened the chances for an interest rate hike by the Federal Reserve. Higher prices and borrowing rates have already been weighing on consumers and the broader economy. Another rate hike could keep markets volatile for a longer period.
4 Defensive Stocks With Upside
The Vita Coco Company
The Vita Coco Company, Inc. provides a beverage platform. COCO’s brands include coconut water, Vita Coco; clean energy drink Runa; sustainable enhanced water, Ever & Ever, and protein-infused water, PWR LIFT.
The Vita Coco Company’s expected earnings growth rate for the current year is 64.7%. The Zacks Consensus Estimate for current-year earnings has improved 10.7% over the past 60 days. COCO currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chefs' Warehouse
The Chefs' Warehouse, Inc. is a distributor of specialty food products in the United States. CHEF is focused on serving the specific needs of chefs who own and operate restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools and specialty food stores.
CHEF’s Warehouse’sexpected earnings growth rate for the current year is 33.7%. The Zacks Consensus Estimate for the current-year earnings has improved 10% over the past 60 days. CHEF has a Zacks Rank #2 (Buy).
Assembly Biosciences
Assembly Biosciences, Inc. develops therapies for infectious diseases and other disorders of the gastrointestinal (GI) system. Assembly's product portfolio consists of two late-stage assets: VEN 307 for relief from pain associated with anal fissures and VEN 308 for the treatment of fecal incontinence. ASMB is also developing novel microbiome-based technology for targeted oral delivery of therapeutic bacteria, complex proteins, viral antigens and small molecules to treat intractable infectious diseases of the GI tract, such as C. difficile infections.
Assembly Biosciences’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 20% over the past 60 days. ASMB currently has a Zacks Rank #1.
CareDx
CareDx, Inc. develops, markets and delivers a diagnostic surveillance solution for heart transplant recipients. CDNA provides AlloMap, a noninvasive blood test used to aid in the identification of heart transplant recipients. It is also pursuing other areas of transplant surveillance, such as the use of cell-free DNA (cfDNA) as a biomarker for rejection.
CareDx’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 35.2% over the past 60 days. Currently, CDNA has a Zacks Rank #1.