What Happened?
A number of stocks fell in the afternoon session after geopolitical tensions in the Middle East sent crude oil prices soaring, stoking fears of resurgent inflation.
The price for Brent crude, the international benchmark, leaped over 6% to $82.57 a barrel amid an escalating war with Iran, which has threatened to block the Strait of Hormuz. This critical waterway handles about 20% of global oil flow. A sustained increase in energy prices could translate to higher inflation, potentially impacting consumer spending and corporate earnings. This scenario also complicates the Federal Reserve's path forward, as persistent inflation could delay anticipated interest rate cuts that investors have been counting on to support the economy.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Engineered Components and Systems company ESCO (NYSE: ESE) fell 2.9%. Is now the time to buy ESCO? Access our full analysis report here, it’s free.
- Engineered Components and Systems company Enpro (NYSE: NPO) fell 2.8%. Is now the time to buy Enpro? Access our full analysis report here, it’s free.
- Internet of Things company Rockwell Automation (NYSE: ROK) fell 2.7%. Is now the time to buy Rockwell Automation? Access our full analysis report here, it’s free.
- Maintenance and Repair Distributors company VSE Corporation (NASDAQ: VSEC) fell 2.7%. Is now the time to buy VSE Corporation? Access our full analysis report here, it’s free.
- Specialty Equipment Distributors company Richardson Electronics (NASDAQ: RELL) fell 2.7%. Is now the time to buy Richardson Electronics? Access our full analysis report here, it’s free.
Zooming In On ESCO (ESE)
ESCO’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago when the stock gained 7.1% on the news that the stock's positive momentum continued as the company posted strong fiscal first-quarter 2026 financial results, prompting an analyst to raise their price target. The company reported a 35% increase in net sales, which rose to $289.7 million from $214.6 million in the prior year's quarter. Net earnings from continuing operations also grew to $28.7 million, or $1.11 per diluted share, up from $20.3 million, or $0.79 per share. The Aerospace & Defense segment was a standout performer, with sales up 75.6%. Strong demand was evident as orders surged to $557.2 million, lifting the company's backlog and providing solid revenue visibility. Following the results, Stephens boosted its price target on ESCO to $300 from $275, reflecting upbeat long-term expectations.
ESCO is up 40.2% since the beginning of the year, and at $277.11 per share, it is trading close to its 52-week high of $285.79 from March 2026. Investors who bought $1,000 worth of ESCO’s shares 5 years ago would now be looking at an investment worth $2,605.
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