In this article, we will discuss some US companies that can be affected by the current crisis in Europe.
The US stock market is falling on Monday as investors weigh the consequences of the escalating tensions between the West and Russia. The western world seems united to punish the Russian government, planning well-thought-out sanctions that could cripple Russia’s economy and bar the country’s elite from making financial transactions. The U.S., Europe and Canada have agreed to prevent the Bank of Russia from deploying its $630 billion stockpile of international reserve “in ways that undermine the impact of our sanctions,” the countries said in a joint statement.
However, analysts also believe that imposing sanctions on Russia would also affect several US businesses that are operating in Russia or have a customer base in the country. While tech stocks like Meta Platforms Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL) are gaining value in the current scenario, several stocks are tumbling due to the upcoming effects of the war.
JPMorgan said in a latest report that while the current crisis is a “low earnings risk” for US companies, an energy price shock coupled with an aggressive central bank pivot focused on inflation could further dampen investor sentiment and growth outlook.
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In this article we will take a look at some US stocks that are going to feel the reverberations of the Russian invasion of Ukraine and US sanctions against Russia.
Ukraine War and Sanctions Could Affect These 10 US Stocks
10. McDonald’s Corporation (NYSE:MCD)
Being a global fast-food chain, McDonald’s Corporation has a strong presence in Russia and the current crisis would affect the company’s operations. As of 2022, McDonald’s Corporation has 850 stores in Russia. The country accounts for 4.2% of its total revenue. JPMorgan also counted McDonald’s Corporation among the list of stocks that could be negatively affected amid the current geopolitical environment.
McDonald’s Corporation was already in the spotlight after activist investor Carl Icahn had appointed two members to the company’s board.
As of the end of the fourth quarter, 57 hedge funds reported having stakes in the fast-food company. The total worth of these stakes is $2.2 billion.
9. PepsiCo, Inc. (NYSE:PEP)
Eastern Europe accounts for about 4.4% of the total net sales of PepsiCo, Inc. (NYSE:PEP). In 2020, PepsiCo, Inc.’s operations outside the US generated 42% of its consolidated net revenue, and Russian operations played a key role in this figure. PepsiCo, Inc. is the largest food and beverage manufacturer in Russia. In 2020, Pepsi’s revenue from Russia was around $3 billion.
PepsiCo, Inc. recently posted strong fourth-quarter results. Pepsi’s organic sales jumped 11.9% during the period.
Of the 924 hedge funds tracked by Insider Monkey, 60 reported having stakes in PepsiCo at the end of the fourth quarter of 2021.
8. Philip Morris International Inc. (NYSE:PM)
The Russian invasion of Ukraine is affecting Philip Morris International Inc. (NYSE:PM)’s operations in both countries. The cigarette company suspended its operations in the country after the attack. Last year, the country accounted for about 2% of Philip Morris International Inc.’s total cigarette and heated tobacco shipment volume.
In its annual report of 2021, Philip Morris International Inc. said that the increase in PMI’s heated tobacco unit shipment volume was mainly driven by the EU, Russia, Ukraine and Japan.
Philip Morris International Inc. shares declined recently after the company’s President of the EU Region, Frederic De Wilde, sold 29,941 shares at $108.45 – $108.58.
Our database shows that 47 hedge funds have stakes in Philip Morris as of the end of the fourth quarter of 2021.
While the war has dramatically lifted tech stocks like Meta Platforms Inc. (NASDAQ:FB), Microsoft Corporation, Amazon.com, Inc. and Apple Inc. (NASDAQ:AAPL), it brings bad news for companies like PM which have a direct exposure to the Russian market.
7. Mohawk Industries, Inc. (NYSE:MHK)
JPMorgan mentioned Mohawk Industries, Inc. (NYSE:MHK) in its list of stocks that are expected to be negatively affected by the Russian invasion of Ukraine. Mohawk Industries, Inc. produces floor covering products for residential and commercial applications in North America and Europe. In April 2018, Mohawk Industries, Inc. said that its sales in Russia and Mexico grew the fastest. As of the end of 2020, the company has approximately 14,600 employees in Europe and Russia.
38 hedge funds tracked by Insider Monkey are long MHK as of the end of 2021.
6. EPAM Systems, Inc. (NYSE:EPAM)
EPAM Systems Inc. (NYSE:EPAM) has strong exposure to the Russian and Ukrainian markets. That’s why the stock tumbled to an 11-month low following the Russian invasion. The software engineering company stock has lost 15% in the last five days. Eastern Europe accounts for about 4% of the company’s revenue. As of December 2017, EPAM Systems Inc. employed 3800 IT professionals in Russia.
EPAM Systems Inc. posted strong fourth-quarter results and also gave strong guidance for 2022. The company expects its revenue in the period to come in at $5.150 billion, as compared to the consensus of $4.87 billion.
While EPAM is tumbling, major tech stocks like Meta Platforms Inc. (NASDAQ:FB), Microsoft Corporation, Amazon.com, Inc. and Apple Inc. (NASDAQ:AAPL) are gaining ground as of Feb. 28.
Harding Loevner, an investment management firm, published its “Emerging Markets Equity Fund” second-quarter 2021 investor letter and mentioned EPAM Systems Inc.. Here‘s what the fund said:
“By sector, good stocks in Information Technology (IT) and Consumer Staples were large positive contributors, offset by weaker results in Financials and Consumer Discretionary. EPAM Systems Inc., the Eastern European-centered (but US-Listed) software engineering company, continued to benefit from the acceleration in demand for digital transformation projects and customers’ consolidation of their technology service providers.”
5. Carnival Corporation (NYSE:CCL)
The cruise industry is facing a broader decline amid the effects of the Russian invasion. Carnival Corp. in particular is having a hard time as the stock recently fell due to the company’s exposure to Russia and also because of its poor Q4 earnings report. Carnival Corp. has also issued a cancellation of calls to Russia for some lines.
The cruise industry is also facing a new threat: carbon taxes. Morgan Stanley recently warned that the cruise line sector could face up to $2 billion in carbon levy from the International Maritime Organization.
Jack Woodruff’s Candlestick Capital Management owns a $112 million stake in Carnival Corp. as of the end of 2021. The fund is among the 33 hedge funds that had stakes in the company at the end of December.
4. Mondelez International, Inc. (NASDAQ:MDLZ)
Food company Mondelez is also in the limelight as analysts believe the company is under pressure because of its exposure to Russia and Ukraine. The company is a leading chocolate maker in Russia. In 2013, its Russian subsidiary posted revenue of 55.2 billion rubles, up 13.1% year-on-year.
Michael Lavery, a Senior Research Analyst at Piper Sandler & Co., said in a recent note that Russia accounted for about 10% to 11% of Mondelez International’s European Union (EU) segment, and approximately 3% of its total sales in 2022.
As of the end of the fourth quarter of 2021, 40 hedge funds in the database of Insider Monkey had stakes in Mondelez.
3. The Boeing Company (NYSE:BA)
JPMorgan believes that the Russian invasion of Ukraine and the West’s sanctions could negatively affect Boeing. Boeing has design centers in Russia and the company reportedly employs 2,000 people in the country under contract.
Of the 924 funds tracked by Insider Monkey at the end of the fourth quarter, 50 held long positions in Boeing. Ken Griffin’s Citadel Investment Group has a leading position in the company, with 926,933 shares, worth $187 million.
2. Gentherm Inc. (NASDAQ:THRM)
Thermal management technologies company Gentherm Incorporated is also feeling the effects of the Russian invasion. The company said in the latest SEC filing that its facility in Vynohradiv, Ukraine, is operational as of now. It said the products manufactured in Ukraine accounted for about 11% of its revenue.
At the end of the fourth quarter of 2021, 15 hedge funds tracked by Insider Monkey reported owning takes in Gentherm Incorporated. The total value of these stakes is about $204 million.
1. Delta Air Lines, Inc. (NYSE:DAL)
After suffering COVID-related losses for months, airline stocks are now taking a beating amid the current war in Europe. Delta Air Lines, Inc. (NYSE:DAL) was especially named by JPMorgan in its report about stocks that could lose value in the backdrop of the current scenario. Delta Air Lines, Inc. has withdrawn its codeshare services with Aeroflot beyond Moscow’s Sheremetyevo Airport and removed Aeroflot’s code from Delta-operated services from Los Angeles and New York-JFK.
The stock is down about 4% in the last five days.
A total of 47 hedge funds tracked by Insider Monkey have stakes in the company, as of the end of the fourth quarter.
You can also take a look at Short Sellers Were Right About These 10 Stocks and 10 Undervalued Dividend Kings To Buy In 2022.
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This article is originally published at Insider Monkey.
