Written by Rebecca Lipman

Maybe it's about time we got nervous about an Iranian conflict. Sure, the rumor mill has been spinning on this topic for a while, but the allegations are getting scarier.

Consider this nugget of information: Iran launched a satellite into orbit Friday. The Associated Press reports "the launch raises concerns not only for the satellite's possible military applications, but because the rocket that delivered it uses the same technology as a ballistic missile would use. Say, an inter-continental ballistic missile fitted with a nuclear warhead."

Then, "Israel announced Thursday that Iran is developing technology that will enable it to launch such a missile that will reach the continental United States. This satellite launch only reinforces this possibility."

Secretary of Defense Leon Panetta announced his predictions that Israel may strike Iran this spring. This idea is only strengthened by the news that Israel canceled a massive missile defense drill with the U.S. scheduled for the spring, saying that they couldn't spare the forces at that time.

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Iran has also made it very clear that any action against them will result in heavy retaliation. The cards are on the table, the stakes are high, and it all sounds very ominous.

Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below.

Business Section: Investing Ideas
As the threats of a war escalate, the economy prepares for impact. The most immediate reaction can be found in oil prices, which are affected by Iran's control of the Strait of Hormuz, an important transit route at the mouth of the Persian Gulf for about a fifth of the world's oil.

Iran has made it clear that they have no qualms about closing the strait, which means oil shipments will be halted, or have to make roundabout trips that will hike up prices.

So we were wondering, which oil companies have been boosted by bullish sentiment?

For ideas, we collected data on institutional money flows, and identified a list of names that have seen significant institutional buying over the last quarter.

From this universe, we wanted to apply another sentiment screen. To find those companies, we collected data on short selling, and identified a list of companies that have seen significant short covering over the last month.

Big money managers have boosted their holdings of these stocks over the last quarter, and short sellers seem to think these stocks are ready to pop higher-do you agree? (Click here to access free, interactive tools to analyze these ideas.)


1. Alon USA Energy, Inc. (NYSE: ALJ): Operates as an independent refiner and marketer of petroleum products in south central, southwestern, and western regions of the United States. Net institutional purchases in the current quarter at 697.5K shares, which represents about 6.08% of the company's float of 11.48M shares. Shares shorted have decreased from 1.02M to 884.72K over the last month, a decrease which represents about 1.18% of the company's float of 11.48M shares.

2. RPC Inc. (NYSE: RES): Provides a range of oilfield services and equipment to the oil and gas companies primarily in the United States. Net institutional purchases in the current quarter at 1.5M shares, which represents about 3.05% of the company's float of 49.14M shares. Shares shorted have decreased from 7.70M to 6.98M over the last month, a decrease which represents about 1.47% of the company's float of 49.14M shares.

3. Rex Energy Corporation (Nasdaq: REXX): Operates as an independent oil and gas company in the Appalachian, Illinois, and Denver-Julesburg Basins. Net institutional purchases in the current quarter at 3.8M shares, which represents about 10.69% of the company's float of 35.54M shares. Shares shorted have decreased from 9.04M to 8.61M over the last month, a decrease that represents about 1.21% of the company's float of 35.54M shares.

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Disclosure: Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Institutional data sourced from Fidelity, short data from Yahoo! Finance.