Welcome to my video presentation for Monday, March 28. The article below is a condensed transcript.

Let’s look at the litany of risks facing investors. Rising inflation; a tightening Federal Reserve; elevated energy prices; supply chain imbalances; and the Russia-Ukraine war.

But the bulls refuse to cede control. Corporate profit growth remains on track, albeit at a slower pace, and the global economy continues to expand. The pandemic is flaring up in certain regional pockets, but overall it appears to be waning. Unemployment is falling and retail spending is holding firm.

Another positive development is the remarkable unity lately of Western democracies. In only a few weeks, Russia’s invasion of Ukraine has brought considerable cohesion to NATO and the Trans-Atlantic alliance.

This sense of common purpose had eluded the free world for several years; Russian President Vladimir Putin has inadvertently brought America and Europe much closer together. That’s a good thing for global finance, because it shores up the rules-based international order that has generated global prosperity since the end of World War II.

Accordingly, stocks in the U.S. and overseas closed last week in positive territory (see table).

Research firm FactSet reports that for the first quarter of 2022, the projected earnings per share (EPS) growth rate for the S&P 500 is 4.8%. If 4.8% turns out to be the actual EPS growth rate for Q1, it would represent the lowest growth rate reported by the index since Q4 2020, when it came in at 3.8%.

Conversely, analysts are more optimistic than normal in their revenue estimate revisions. As of March 25, the S&P 500 is expected to report year-over-year revenue growth of 10.7%. Ten of the 11 S&P 500 sectors are projected to report year-over-year growth in revenues, led by the energy and materials sectors.

Read This Story: The Bullish Case (Without the Bull)

Valuations remain comparatively high. The forward 12-month price-to-earnings (P/E) ratio for the S&P 500 is 19.5. This P/E ratio is above the five-year average (18.6) and above the 10-year average (16.8). That said, valuations aren’t seriously out of whack and the dip year-to-date in stocks has put pricey but inherently sound stocks onto the bargain shelf. Under these conditions, judicious buying-on-the-dips makes sense. (The video contains additional details and charts.)

The value of the S&P 500 has fallen by 4.7% since December 31. However, the consensus of industry analysts is that the S&P 500 will rack up a price increase of 16.8% over the next 12 months.

Over this time frame, the communication services (+27.9%), consumer discretionary (+21.1%), and information technology (+19.9%) sectors are expected to post the largest price increases.

A salient risk, though, is the volatile energy sector. Factors are mounting again for higher crude oil prices. The combination of terrorist attacks on Saudi oil infrastructure and a likely ban of Russian oil exports to Europe has pushed up the price of West Texas Intermediate (WTI), the U.S. benchmark.

Higher crude of course feeds inflation, serves as a tax on consumers, and pressures corporate profit margins.

Amid these uncertain conditions, where can you find new opportunities without undue risk? Turn to my colleague, Nathan Slaughter, chief investment strategist of Takeover Trader.

Corporations are flush with cash and they’re about to unleash a “feeding frenzy” of merger and acquisition activity. The level of blockbuster corporate deals is breaking records.

You can profit from the coming chaos on Wall Street, by following Nathan’s advice. He has a knack for pinpointing big corporate deals, before they happen. Gain instant access to his latest insights, by clicking here now.

John Persinos is the editorial director of Investing Daily.

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