In this article, we will discuss some US companies that can be affected by the current crisis in Europe. You can skip our comprehensive analysis of these companies and go directly to Ukraine War and Sanctions Could Affect These 5 US Stocks.
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.
Luis Louro / shutterstock.com
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 (NYSE:MCD) has a strong presence in Russia and the current crisis would affect the company’s operations. As of 2022, McDonald’s Corporation (NYSE:MCD) has 850 stores in Russia. The country accounts for 4.2% of its total revenue. JPMorgan also counted McDonald’s Corporation (NYSE:MCD) among the list of stocks that could be negatively affected amid the current geopolitical environment.
McDonald’s Corporation (NYSE:MCD) 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. (NYSE:PEP)’s operations outside the US generated 42% of its consolidated net revenue, and Russian operations played a key role in this figure. PepsiCo, Inc. (NYSE:PEP) is the largest food and beverage manufacturer in Russia. In 2020, Pepsi’s revenue from Russia was around $3 billion.
PepsiCo, Inc. (NYSE:PEP) 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. (NYSE:PM)’s total cigarette and heated tobacco shipment volume.
In its annual report of 2021, Philip Morris International Inc. (NYSE:PM) 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. (NYSE:PM) 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 (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) 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. (NYSE:MHK) produces floor covering products for residential and commercial applications in North America and Europe. In April 2018, Mohawk Industries, Inc. (NYSE:MHK) 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. (NYSE:EPAM) employed 3800 IT professionals in Russia.
EPAM Systems Inc. (NYSE:EPAM) 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 (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) 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. (NYSE:EPAM). 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. (NYSE:EPAM), 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.”
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Disclosure: None. Ukraine War and Sanctions Could Affect These 10 US Stocks is originally published on Insider Monkey.
