Inflation is killing the stock market but these seven stocks beat inflation and could be some of the best to buy. In this video, I’ll show you how to find the best stocks to beat inflation and an easy stock screener for inflation stocks. I’ll then reveal the seven stocks to watch that can not only survive but thrive as inflation heats up. FREE Report! See the Top 7 Stocks in my Portfolio! https://mystockmarketbasics.com/motleyfool
I’ve been arguing that inflation would be higher than expected since early last year and it seems the market has finally come around to that but it’s still not fully pricing it in. Yeah, we probably won’t have 6% inflation through this year but there are some real long-term pressures like higher rent and wages that will keep inflation above 4% this year and into next. You need to be ready for this, investing in stocks that can beat inflation.
To find our list of stocks to beat inflation, we’ll be using one very important ratio, the gross margin. The gross margin is the percentage of revenue left after paying production costs like materials, packaging and some direct labor to making the product. So this is a profitability measure, how well is management doing generating profits against higher costs for materials.
That’s what we’re looking for in this list of stocks. Companies that even though their own costs might be rising with inflation, are able to increase prices and sales without losing customers…true inflation-protected stocks.
It’s also important to know which industries and stocks are getting hit the hardest on higher inflation. Any company with lower-wage workers is seeing massive increases in labor costs as workers demand higher wages or leave. This is hitting the food service and manufacturing industries. Also the retailers are getting hit on higher materials and transportation costs so be especially mindful of inflation in consumer discretionary stocks.
We’ll also be watching the operating margin for creating our list of stocks to buy against inflation. This is the operating profits, so not just the gross profits but what’s left over after taking out wages, marketing and other operational costs, what’s left of sales after all this divided by the total revenue. This is just as important because it’s going to show you which companies are able to keep their profitability even as wages head higher.
0:00 Best Stocks to Buy for Inflation
0:58 Best Measure for Inflation Stocks
2:30 Stocks that Beat Inflation
4:31 How Bad Could Inflation Get in 2022?
8:27 What I Look for in Inflation Stocks
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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
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