Rising tensions in the Middle East between the U.S. and Iran have pushed markets back into a risk-off mood.
Amid this backdrop, investors are searching for stocks that combine resilience, income, and upside.
Below we highlight key stocks that tend to benefit from geopolitical uncertainty.
In the face of escalating Middle East tensions and a clear risk-off mood gripping markets, investors are searching for stocks that combine resilience, income, and upside.
Source: Investing.com
The following ten companies represent a diversified approach to defensive positioning, spanning defense contractors who directly benefit from increased military spending, energy giants insulated by commodity price dynamics, consumer staples companies whose products remain essential regardless of headlines, and utilities providing steady income through market turbulence.
Defense Stocks
In the aerospace and defense sector, Lockheed Martin (NYSE:) stands out as a leading contractor, benefiting from increased military budgets and demand for advanced weaponry amid U.S.-Iran escalations. Its portfolio includes fighter jets and missile systems critical to current conflicts, providing a hedge against volatility. LMT closed at $667.82 on Tuesday, with a year-to-date (YTD) return of 38%.
Source: InvestingPro
Similarly, Northrop Grumman (NYSE:) excels in defense technology, with shares surging on orders for cutting-edge systems like drones and cyber defenses. The company’s record $95.68 billion backlog underscores its resilience. NOC is currently at $759.11, posting a robust YTD return of 33%.
Oil Majors
Energy stocks are also thriving as oil prices spike due to supply disruption fears. Exxon Mobil (NYSE:) leverages its upstream operations to profit from elevated crude benchmarks. With diversified assets shielding it from regional risks, XOM has demonstrated strong momentum. It closed at $151.83 on Tuesday, with a YTD return of 26%.
Source: InvestingPro
Chevron (NYSE:) mirrors this upside, positioned in key exploration and production areas while maintaining a solid balance sheet for dividends and buybacks. Amid the oil rally sparked by recent attacks, CVX offers both growth and income stability. The stock trades near $189, achieving a YTD return of 24%.
Blue-Chip Staples
Shifting to absolute defensives, healthcare behemoth Johnson & Johnson (NYSE:) and consumer staples leader Procter & Gamble (NYSE:) are cornerstones of any risk-off portfolio.
Source: InvestingPro
Demand for healthcare products and everyday household goods remains virtually impervious to economic cycles, providing predictable earnings and reliable dividends. While analyst price targets for these names are often modest in terms of percentage upside, their revisions are typically focused on earnings stability rather than dramatic price moves, underscoring their role as capital preservers.
Similarly, discount retail giant Walmart (NASDAQ:) and membership warehouse leader Costco (NASDAQ:) are strategically positioned to outperform. In a climate of consumer strain, these companies attract budget-conscious shoppers, driving foot traffic and market share gains.
Source: Investing.com
Analysts have been positive on both, with upside targets predicated on their defensive growth characteristics and strong execution.
Utilities & Consumer Brands
Rounding out the list are two companies offering unique defensive qualities. Nextera Energy (NYSE:), the world’s largest utility and renewable energy leader, operates a regulated business that generates predictable cash flows, acting as a bond proxy in an uncertain market. Recent analyst commentary has focused on its unparalleled growth trajectory within the traditionally staid utility sector, maintaining strong long-term price targets.
Finally, Constellation Brands (NYSE:) presents a more nuanced defensive play. Its premier portfolio of high-demand beer brands provides a measure of recession resilience, as consumer spending on alcohol tends to be durable.
Source: InvestingPro
While subject to some discretionary risk, analyst sentiment has been bolstered by its strong pricing power and consistent performance in its core beer business, with recent price target revisions reflecting confidence in its brand equity’s ability to weather a softer economic climate.
Bottom Line
In a world where headlines drive volatility and capital flees to safety, these ten stocks offer a spectrum of risk and reward. Defense and energy names are the clearest beneficiaries of geopolitical stress. Blue-chip consumer and utility stocks deliver yield and steady growth, with select opportunities for value if volatility persists.
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Disclosure: This is not financial advice. Always conduct your own research.
At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust ETF. I am also long on the Technology Select Sector SPDR ETF. I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
