3 Stocks About to SURGE Once Conflict Ends

Key Concepts

• Dividend Growth Investing: A long-term strategy focusing on companies that consistently increase dividend payouts, providing stability during market volatility.
• Bear Market Cycles: Historical market downturns that, while stressful, are typically temporary (averaging 9–18 months) and historically followed by bull markets.
• Relative Strength: Identifying stocks that outperform their peers within a struggling sector, signaling potential leadership during a recovery.
• Treasury Services: Cash management and transaction services for global corporations, a core strength for Citigroup.
• Vertical Integration (Aviation): The strategy of owning supply chain assets (e.g., oil refineries) to hedge against commodity price volatility.

1. Investment Strategy During Geopolitical Volatility

Mark Likenfeld emphasizes a two-pronged approach to navigating market instability caused by conflict:

• Long-Term Dividend Strategy: For core holdings, volatility is viewed as noise. If a company has a history of raising dividends and a solid business model, the strategy is to hold through the cycle, banking on the long-term upward trajectory of the market.
• Short-Term Risk Management: Investors should remove capital from the market if it is needed for expenses within the next 2–3 years. This protects against the risk of being forced to sell during a market trough.
• Market Sentiment: Likenfeld notes that while headlines suggest a dire outlook, the market is showing signs of "risk-on" behavior and increasing breadth, suggesting investors are not pricing in a worst-case scenario.

2. Three Stocks Positioned for Post-Conflict Recovery

Citigroup (Ticker: C) – Financial Sector

• The Thesis: Citigroup is a leader in treasury and cash management services, particularly in emerging markets (operating in 95 countries).
• Competitive Advantage: Unlike peers focused on domestic investment banking, Citigroup’s global footprint in regions like Mongolia and Saudi Arabia makes it indispensable for multinational transactions.
• Outlook: The stock is currently undervalued with significant room for margin improvement. Likenfeld expects a quick rebound in financial stocks as a leading indicator of economic normalization.

Verizon (Ticker: VZ) – Communication Sector

• The Thesis: A high-yield dividend play (5.7%) with a 21-year history of dividend increases.
• Growth Catalyst: Verizon’s acquisition of Frontier Communications positions it to benefit from potential government infrastructure spending on rural internet buildouts once defense spending priorities shift post-conflict.
• Consumer Behavior: As a premium service provider, Verizon is currently pressured by consumer uncertainty. However, as the economy stabilizes, the return of consumer confidence is expected to drive demand back to premium telecom services.

Delta Airlines (Ticker: DAL) – Airline Sector

• The Thesis: Delta is the only U.S. airline that owns its own oil refinery, providing a massive hedge against jet fuel price spikes.
• Financial Impact: In 2022, the refinery saved the company $800 million. Furthermore, the refinery produces diesel as a byproduct, which Delta sells or trades, often generating significant profit during high-energy-price environments.
• Valuation: Despite 20% expected earnings growth this year and 57% over the next three years, the stock trades at a low P/E ratio of 11 and a price-to-sales ratio below 1.0 (0.7).

3. Key Arguments and Perspectives

• On Analyst Price Targets: Likenfeld dismisses consensus price targets as "meaningless" and "groupthink." He argues that analysts are often late to the party, upgrading stocks only after they have already performed well. He prefers to go against the consensus when the fundamentals support a bullish thesis.
• On Market Timing: Likenfeld asserts that every bear market in history has been followed by a bull market. He advises investors to keep their "eye on the prize" of long-term wealth building rather than panicking over 9–18 month downturns.
• On Economic Indicators: He views the financial sector as a "forward-looking mechanism." If financial stocks rebound quickly after the conflict ends, it serves as a reliable signal that the broader global economy is recovering.

4. Synthesis and Conclusion

The core takeaway is that geopolitical conflicts create temporary market dislocations that punish entire sectors indiscriminately. By focusing on "strong stocks in weak groups"—companies that have maintained relative strength despite sector-wide selling—investors can position themselves for significant upside when the conflict subsides. Likenfeld’s strategy relies on identifying companies with structural advantages (Citigroup’s global treasury network, Verizon’s dividend stability/infrastructure potential, and Delta’s refinery hedge) that allow them to outperform their peers and lead the market recovery.