Defensive Plays with a Domestic Focus Could Perform Strongly in Today’s Environment

The past few weeks has seen a flurry of US companies announcing the termination of their business in Russia. That will impact the bottom line of some companies more than others, given the state of Russia’s economy.

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  • For some players, like fast food operations, the loss of the Russian market can have a big impact. For other sectors, there may not be much more than a symbolic gesture.

    One surprising winner in today’s environment could be The Wendy’s Company (WEN). The fast-food chain has nearly no exposure to Russia, with far more of its operations being domestic to the US rather than a global player like so many other fast-food companies on the market today.

    And if the economy slows, diners tend to shift downscale away from high-end and chain restaurants towards fast food, making this a defensive play now.

    Action to take: Investors may like shares here, as the company is better valued than peers at 24 times forward earnings. Plus the stock pays a 2.4 percent dividend yield here, with the payout recently increased.

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  • For traders, the August $25 calls, last going for about $0.70, offer reasonable returns from here. Traders can likely nab a mid double-digit gain in the next few months on a continued move higher in shares.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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