End-of-Conflict Purchases to Consider After U.S., Iran Update

The market continues to rally on increasing hopes that Iran and the U.S. will soon come to an agreement to end this 10-week-old conflict.

The basics of this agreement that seem to be emerging consists of Iran agreeing to a moratorium on its nuclear enrichment programs. In return, the U.S. would lift sanctions on the Iranian regime and release some frozen assets. Critical for global supply chains is that both sides would agree to end restrictions on maritime transit through the Strait of Hormuz.

However, much clarity is needed on this front before any deal potentially could be reached. Then, it will be a matter of whether both sides keep up their ends of the agreement, as well as Israel and Iranian proxies in the Gulf region doing the same. And even if traffic starts to return to normal through the Strait of Hormuz, it will take many months and quarters for the damage to global supply chains to fully be restored.

Gasoline prices are roughly 40% higher in the United States since the start of March. This pain at the pump is pushing even more strain on consumers, especially those on the wrong end of the K-shaped economy. Diesel prices are up an even higher percentage. Giant shipping concern Maersk stated tjat $100 oil is costing it roughly $500 million a month in additional expenses this week, costs that will be passed on to customers globally.

AI-related chip makers and technology concerns continue to deliver blowout results and then power higher, like the 31% rally in Datadog, Inc. (DDOG) on Thursday following the release of its Q1 numbers. Meanwhile, many consumer-dependent concerns on the wrong end of the K-shaped economy are getting plastered after posting weak quarterly results, much like Shake Shack (SHAK) and Planet Fitness (PLNT) did on Thursday.

I continue to be quite cautious with my portfolio allocation. The likelihood of a solid drawdown in equities sometime this summer feels strong. I did add to my stake in DoorDash (DASH) via covered call orders this week. The company delivered a bottom-line beat with its Q1 numbers Wednesday.

Total orders were up 27% year-over-year. DoorDash is being impacted by higher gas prices and will incur $50 million of costs this spring to offset their Dashers fuel costs. On the flip side, DoorDash should benefit from the "trade down" effect. More individuals and couples, given the challenged consumer, are likely to ditch a night out with the parking, $14 dessert and $16 cocktails for a meal delivered from one of their favorite restaurants and stream something at home on Netflix.

I have mentioned that I like mining stocks recently on the promise that energy prices will hopefully soon come down once the Strait of Hormuz reopens. Energy makes up a big chunk of their operating costs. I will be adding to my stake in Hecla Mining (HL) on Friday after the company just reported first quarter results. This silver focused miner has eliminated its $550 million of net debt over the past year and a half and is sitting on just over $320 million of net cash on the balance sheet.

Hecla produced 3.9 ounces of silver and 13,000 ounces of gold last quarter from its three primary properties. The company is solidly profitable, is producing solid free cash flow, and is buying back stock. This miner should produce between 15 million to 16.5 million ounces of silver in FY2026, and management has outlined a path to eventual production of 20 million ounces annually.

At the time of publication, Jensen was long HL and DASH.