Inside today’s Daily Journal…

The war in Iran is reaching a critical inflection point.

Anything can happen at this point… On the one hand, we’ve seen the first formal peace offering from the Trump administration. But at the same time, the U.S. is moving thousands of troops into place for a potential boots-on-the-ground invasion into Iran.

Meanwhile, the countdown clock is ticking away toward a crippling energy shortage. Absent an imminent resolution that restores oil flows through the Strait of Hormuz, the stage is set for physical shortages and oil prices trading up to $150 per barrel. And if history is any guide, that would take the air out of today’s bull market.

Over the last four decades, every recession or bear market has been preceded by a rapid increase in the price of oil.

Given this backdrop, we believe the Trump administration will begin pushing for an imminent resolution aimed at restoring global oil flows through the Strait of Hormuz. That resolution comes through one of two pathways: escalation or negotiation.

And we’ve identified one stock that can thrive in either scenario.

Let’s start with the optimistic case.

Yesterday, the Trump administration unveiled a 15-point proposal to secure a one-month ceasefire. The crux of the proposal requires that Iran dismantle its nuclear weapons and uranium enrichment programs, while allowing the country to retain its civil nuclear power capabilities. This is essentially the same agreement that was on the table prior to the outbreak of the war on February 28. The U.S. also added two new conditions, including controls on Iran’s ballistic missile program and limitations on Iranian support for its proxy militia groups in the region.

But the key new feature in this proposal was an offer to fully lift economic sanctions on Iran. This was a major concession by the Trump administration that would undo 47 years of economic pressure on the Iranian regime. This signaled a major shift in the Trump administration away from its prior hardline stance of unconditional surrender.

The market reacted to this offer with a sense of optimism that the end of the conflict may be in reach… Stocks rallied and energy prices fell.

Here’s the problem: with the Iranian regime now in full control over 20% of the global energy supply, the country’s leadership now believes it holds the real negotiating power. At least that’s the conclusion we can draw from their response to America’s opening offer.

Based on reporting last night from The Wall Street Journal, Iran has listed the following demands for a peace deal:

A U.S. official called the demands “ridiculous” and “unrealistic.” We put the odds of Trump agreeing to these terms as somewhere between slim and none.

We expect that Tehran will ultimately accept a lot less as it negotiates its way into the middle ground of an agreement. But with both sides miles apart, working toward that middle ground will take time.

That’s a problem, because time is on Iran’s side.

Each day without an agreement means the oil market loses another 12 million barrels through the Strait of Hormuz. The only mitigating factor is the agreement among 32 countries to tap 400 million barrels of strategic oil reserves. But logistical constraints have limited the flow rate of these reserves to only about 1.2 million barrels per day (b/d). That leaves a net shortfall of about 10 million b/d, creating physical shortages around the world.

South Korea has implemented emergency level fuel rationing, including restrictions on vehicle use. In Australia, hundreds of gas stations have run out of at least one type of fuel. And the Philippines became the latest country to declare a national energy emergency yesterday, with only 45 days of oil reserves remaining.

North and South America have avoided the brunt of the fallout… but this is merely due to the timing of fuel in transit. It takes three to four weeks for cargo ships to travel from the Middle East to the West. So ships arriving in the West today got through the trouble spots like the Strait before the conflict began.

This means the West hasn’t experienced the same physical disruptions as regions closer to the conflict. But that’s about to change. We can see the preview of this in the collapse of “oil in transit,” meaning the inventory of oil stored on cargo ships, in the chart below:

When the flow of oil shipments into the Americas grinds to a halt, this will begin forcing up the price of West Texas Intermediate crude oil toward similar levels seen in overseas markets of around $150 per barrel.

That leaves an increasingly narrow window for the Trump administration to reopen the Strait of Hormuz before facing the prospect of significant economic fallout at home. With negotiations stalled and no success opening the Strait with air power alone, it appears the Trump administration may be preparing for its next best option: a land invasion in Iran.

On the same day the 15-point ceasefire proposal was unveiled, the U.S. authorized the deployment of 1,000 troops from the 82nd airborne to the Middle East. Meanwhile, another 4,000 to 5,000 U.S. Marines are slated to arrive on Friday.

While no formal orders have been announced for an official ground invasion, the chatter from various U.S. officials suggests that Kharg Island could be one of several targets for troop deployment in the Strait. Kharg is a strategic oil hub 15 miles offshore of Iran that processes 90% of the country’s crude oil exports, which is shown on the map below, along with several other island targets in the Strait:

It’s anyone’s guess what a ground invasion in Iran would look like. But one thing is clear: no oil tankers would be moving through the Strait during that kind of engagement. And the Iranians have threatened to renew their attacks on energy infrastructure throughout the region if the U.S. attempts a ground invasion.

So on the one hand, we have the prospect of a potential ceasefire deal. On the other hand, we have the potential for significant escalation that could accelerate the path towards a crippling energy shock.

We continue to believe that energy stocks are a must-own hedge against this worst-case outcome. However, the flip side is the possibility that cooler heads prevail, which could lead to a collapse in energy prices as supplies begin flowing again.

But we’ve identified the ultimate business model that will thrive in either scenario. It’s located in America’s premier shale basin – the Permian – but it’s not involved directly in energy production. Instead, it’s capitalizing on the even bigger bull market: a bull market in water.

The same geologic formations that contain oil and gas also tend to hold water. When drillers tap into these deposits to produce hydrocarbons, that water comes up the wellbore as an unintended byproduct, known as “produced water.”

A little known fact about the Permian Basin is that it holds a lot more water than the average shale basin – about 10 times as much:

Notice that the produced water volumes in the Permian continue rising each year, regardless of whether oil prices are up or down – including during the COVID-19 outbreak in 2020 that plunged energy into a historic bear market.

The water volumes in the basin have consistently outpaced oil-production growth, rising 330% over the past decade, despite the ups and downs in prices along the way:

Now, here’s the key thing to know about produced water: it’s a toxic waste stream containing about four times more salt than surface-level seawater. That means it must be disposed of deep underground into what are called salt-water disposal wells (“SWD”).

Here’s the problem: after billions of gallons of water injections, the Permian basin has turned into a pressure cooker. It’s causing earthquakes that ripple out hundreds of miles into towns like Dallas, El Paso, and San Antonio. And it has also led to explosive blowouts through the wellbores of long dead oil wells. Like the one shown below, from 2022, when a 100-foot geyser of saltwater exploded through an abandoned oil well and blanked the ground with super-saturated salt water that resembled a fresh patch of snow:

The situation came to a head in 2025, when the Texas Railroad Commission slashed new permit approvals for SWDs by nearly 50%. That’s a big problem for Permian shale drillers. If they can’t dispose of their produced water, the entire operation shuts down.

Drilling new oil or gas wells in the Permian is no longer about finding attractive new drilling locations. The biggest constraining factor is finding a place to put the wastewater.

Based on a 2025 survey from the Federal Reserve Bank of Dallas, 74% of oil executives operating in the Permian expect to face drilling constraints over the next five years due to insufficient water disposal infrastructure.

Now, here’s the opportunity: one man anticipated the Permian water crisis more than a decade ago. In 2015, he formed a company that has now become the largest water disposal infrastructure company in America, focused on the Permian basin. He also formed a separate landholding company that acquired property rights to some of the most valuable land in the Permian basin for disposing of this wastewater.

These key holdings have allowed this Texas Landlord to grow revenue by 200% in just the last two years alone:

And the best is yet to come. The company is now partnering with its sister pipeline business to begin building one of the largest water-hauling networks from New Mexico into Texas, starting this year. When completed, this project will add 1 million b/d of capacity, representing 66% growth from its current rate of 1.5 million b/d. And given its massive land position outside of the pressure problems in the Permian basin, it has a total available capacity of 6.9 million b/d, setting the stage for years of future growth.

Here’s what we love about the business: as a passive landowner, it doesn’t incur any of the overhead or capital expense of building pipelines. It simply earns royalties on every barrel of water injected into its land. That’s how it converts 61% of every dollar of revenue into free cash flow.

We first recommended shares of this company in The Trading Club in early January, and are up 27% so far on the position. And we believe there’s a lot more upside to come, as the Permian water boom is set to continue for decades.

But there’s an upside kicker that the market hasn’t even begun pricing in yet. Big tech firms are flooding into West Texas to capitalize on the Permian’s vast supply of dirt cheap energy, to power the data centers underpinning the artificial intelligence (“AI”) boom. And the land this company owns is situated right next to the largest supply of low-cost natural gas in the country.

In November 2024, the company signed a definitive agreement for the development of a data center and related facilities on approximately 2,000 acres of its land in Reeves County, Texas. The counterparties have until December 2026 to select a site and initiate development.

We believe there’s a high likelihood that this deal proceeds and a major announcement is made before year-end. This could provide a major upside catalyst to the share price, as it will unlock a whole new source of incremental royalty revenue.

Here’s the key “tell” that gives us confidence in a deal: in September 2025, the company entered an agreement with one of the largest utility providers in Texas for the development of a 1.1-gigawatt natural gas power generation facility in the Permian Basin. The same location as its 2,000 acre data center lease agreement. The final deal is pending the signing of a power purchase agreement from a data center operator.

And that’s just one part of a broader theme we’ve homed in on called the AI HALO trade: companies with hard assets, and low obsolescence risk that are unlocking the chokepoints of the AI boom. These companies own the land, water rights, energy, and other critical materials required for today’s data center buildout. And all of these assets just became a lot more valuable following the geopolitical shock. They’re all domestic businesses that are insulated from the energy and supply chain disruptions from the conflict in the Middle East.

Click here to get access to the full report.

Tell us what you think of today’s Journal: [email protected]

Good investing,

Ross Hendricks
Houston, Texas

Presented by Paradigm Press

There are three tiny contractors poised to scale exponentially off of Trump’s most recent national security order.

And a legal mandate at the center of it – one that’s creating forced demand for a set of highly-specialized contractors.

Due to geopolitical tensions, the war in Iran, and the trade war with China this situation is accelerating at an unprecedented rate.

And J.D. Vance just revealed that the U.S. government could funnel as much as $100 BILLION into this private sector initiative.

Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Paradigm Press is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

1. The Trump Pain Point Index is soaring. The index – which combines inverse S&P 500 returns, 10-year U.S. Treasury yields, 30-year mortgage rates, gasoline futures, 1-year CPI swaps, and presidential approval ratings into a single measure of economic and political pain – just hit two standard deviations above its mean for the first time ever. Every major spike in this index over the past 15 months has been followed by a White House course correction. The pattern is clear… When bond yields rise and stocks fall, President Trump blinks. The index is screaming that the threshold has been crossed again. The only question is whether ending the war with Iran is still within the president’s control.

2. SpaceX is preparing to go public. Elon Musk’s private aerospace company reportedly plans to file its initial public offering (“IPO”) prospectus this week, targeting a June valuation of $1.75 trillion – up from $1.5 trillion just months ago. The IPO could raise more than $75 billion, shattering Saudi Aramco’s $29.4 billion record set in 2020. The business underpinning all of this is real: Morningstar estimates SpaceX generated nearly $16 billion in revenue in 2025, driven almost entirely by Starlink satellite-internet subscriber growth. The valuation is another matter entirely. At $1.75 trillion, investors are paying roughly 70x sales for a company whose most ambitious growth initiatives – such as orbital data centers and a colony on the moon – have no clear path to revenue.

3. The Fed keeps printing. The U.S. M2 money supply grew 5% over the last year, the biggest increase since June 2022. The growth rate bottomed out at -4.6% in early 2023. As the M2 supply begins to climb back toward its historical growth averages, the consumer continues to face more pressure as inflation builds.

In February’s Tech Frontiers, Erez Kalir recommended shorting shares of software giant Microsoft (MSFT) because, he said, it has tied its future in artificial intelligence (“AI”) to OpenAI – a company that deepens its losses with every incremental dollar it spends to grow. MSFT shares have fallen 23% year to date.

Yesterday, in the Daily Journal, Porter wrote about the likelihood of retailer Target (TGT) cutting its dividend and its capital misallocation continuing to accelerate its doom. Readers share their thoughts…

Peter C. writes:

Porter Comment: My last post was March 3. Target (TGT) closed March 4 around $120.

If you think I am wrong, then you can buy it. I don’t manage anyone’s money, except my family’s.

That’s a market! Different opinions!

Would love to hear from experienced retailers about what happens when you start cutting prices to drive traffic… while spending a lot more on your stores.

Lucky for me, I know a guy!

Best –

Porter

John L. writes:

James S. writes:

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current portfolio page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.