For the last couple of weeks, the market has been taking a beating from rising prices and increased inflation risk. Smart investors are looking for opportunities and inflation stocks to buy now before they go up. The rising prices will likely put pressure on the Federal Reserve to increase interest rates. Check out “How to Profit From Inflation: Strategies, Sectors & Stocks” if you are looking for a big picture strategy and more asset classes.
Below are 3 inflation stock picks:
VanEck Vectors Steel ETF (SLX) is a great stock for smaller investors, or anyone looking for a low-cost play on the steel industry. The ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE Arca Steel Index. It normally invests at least 80% of its total assets in common stocks and depositary receipts of companies involved in the steel sector such as small- and medium-capitalization companies and foreign issuers.
It may concentrate its investments in a particular industry or group of industries to the extent that they comprise 25% or more of total assets under management if it believes that these industries are undervalued relative to other sectors within its portfolio. Read our report here.
Inflation Stocks: Altria Group Inc. (MO)
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Altria Group Inc. (MO) stock is great for someone who is looking for a stable, dividend-paying investment. The tobacco industry is no stranger to scandal. Altria Group Inc. (MO) stock is great for someone who is looking for a stable, dividend-paying investment that pays off in years of stability and growth when it’s not facing a major controversy.
MO’s stock has risen an average of 5% each year over the last 10 years, with dividends yielding around 3%. Yet this attractive security has also proven to be surprisingly resilient—it didn’t wobble much during the recession either and has more than doubled since 2010. It’s also been a good performer in hard times, with an average gain of 19.4% compared to the S&P 500 during 2008 and 2010. Read our report here.
Inflation Stocks: Pfizer (PFE)
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Pfizer Inc. (PFE) is a great stock to invest with because it has a reliable history of steady growth. Pfizer is the world’s largest pharmaceutical company, and they have an extensive portfolio of products and therapeutic areas. As a result, Pfizer will be a huge beneficiary of our population’s aging demographic because it is likely that more people will experience chronic diseases or require medication prescriptions as they age.
Additionally, Pfizer recently signed agreements to purchase Hospira for $15 billion to significantly expand their sterile injectable business and Medivation for $14 billion in order to have an oncology drug portfolio that complements its other major therapy areas. All these factors make Pfizer a great choice for investors looking for low-risk investments with high return potentials.
What I like about Pfizer is that it has a proven record of consistent growth over the last five years. In addition to the 52.4% increase in its EPS during this time period, the company also saw a 32.3% increase in revenues and a 66.6% increase in gross margins. Growth is expected to continue for the next five years as well. Management expects an 18% general expansion of its product portfolio, which will result in an additional 10-15% revenue growth and a 19-24% improvement on its gross margins over this time period (with better than 30% coming from operational efficiency gains).
Irving Wilkinson is the Editor of AlphaBetaStock.com. Prior to joining ABS, he has worked a financial advisor and inside sales desk manager for a broker-dealer. He brings nearly 20 years of experience investing and has a Masters Degree from Western Governors in Business Leadership.
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