Maybe you think Iran will inevitably provoke preemptive action on the part of Israel and the United States to halt its nuclear bomb program. If so, you should consider that it might not have a nuclear bomb program.
Israeli Defense Forces Lieutenant General Gantz recently made a couple statements that will raise some eyebrows, if not for the novelty of his ideas, for the candor with which they were presented:
Iran is moving step-by-step towards a point where it will be able to decide if it wants to make a nuclear bomb. It has not decided yet whether to go the extra mile [...] I don't think [Iran's leader] will want to go the extra mile.
Above is the main conclusion. Iran is building nuclear energy capabilities, and not necessarily a bomb. Is this opinion a new one? No, it has been floating around for a while, but it's coming from one of the key stakeholders in the conflict, and listen to the bombshell Gantz drops next:
The Iranian leadership is composed of very rational people. [followed by a qualification regarding religious fundamentalism]
In very few situations would it be a big deal for a negotiator to refer to his counterparty as rational. In most situations, one assumes one is negotiating with a rational person. But Iran has long been considered "another" situation. Perhaps Gantz is hedging with words and preparing with actions; perhaps the real assumption is that Iran is going to make a bomb. But investors should take Gantz's words claiming Iran rationality seriously.
There are two investment implications that I personally take from Gantz's words.
One, the price of oil is reduced. Investors may want to taper short exposure to Chipotle (CMG), whose gas allergy I profiled recently. This may be a time to reduce natural gas (UNG) speculation as well, because natural gas is a substitute for oil, although I maintain casual bullishness on infrastructure/technology-level plays like Kinder Morgan (KMP) and Westport (WPRT).
Sadly, the price of oil coming down may also mean more short-term pain for First Solar (FSLR), which many feel is more of a long-term pain. Perhaps stupidly, I am a long-term First Solar bull on the basis it will benefit from an increase in the legitimacy of scienctific warnings on carbon emissions/global warming, and see its margins as favorable despite China's manufacturing competition, although I have described the time-frame for this bullishness as "decades".
The second investment takeaway for me personally: nuclear energy bullishness. Iran wants to project its influence onto its neighbors and sees nuclear energy as a means to this end. The focus on nuclear in the capacity of bombs obscures this signal in terms of energy. But Iran is a signal; so is China: nuclear power generation is a huge international growth market.
Although Iran won't directly contribute to the demand for American companies, it does remind us of nuclear relevance despite Fukushima and despite natural gas. One of my favorite plays on nuclear energy is micro-cap Lighbridge Corp (LTBR), which derives consulting revenues from newly nuclear countries and channels them into commercialization of a lucrative improvement on fuel assemblies. Lightbridge technology will also reduce the risk of meltdown and proliferation.
Gantz's words won't solve world peace, but they could help reframe the global conversation aroung Israel and Iran. Investors should take this into consideration; Gantz is known to speak "bluntly" and his words may represent more than political rhetoric -- he has also undertaken forceful military actions in the past so his words should not be written off as those of a pacifist.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.