In this article, we discuss 10 best inflation stocks to buy according to hedge funds. If you want to read about some more inflation stocks, go directly to 5 Best Inflation Stocks to Buy According to Hedge Funds.
Inflationary pressures in the past few months have forced the Federal Reserve in the United States to raise rates five times this year. The total increase comes to about 3 percentage points, a figure expected to rise by 0.75 percentage points when the central bank meets again in three weeks. Inflation data from the Bureau of Labor Statistics continues to paint a bleak picture for the economy. Per latest numbers, the producer price index, a measure of prices that US businesses get for the goods and services they produce, increased 0.4% in September.
The increase excluded food, energy, and trade services and represented a 5.6% rise from a year ago. Food prices led to an increase in goods inflation, with a 1.2% monthly hike. Energy rose 0.7% after posting massive gains the previous two months. US President Joe Biden has played down risks of a recession in the US in the wake of these figures, telling CNN recently that he did not think the US would sink into a recession, but even if it did, he expected it to be a very slight one, remarking that finance experts predicted a recession every six months.
Investors who are anticipating a recession in the US economy have loaded up on some of the best inflation stocks like Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and The Proctor and Gamble Company (NYSE:PG) as the benchmark indexes continue to register declines. Pierre-Olivier Gourinchas, the chief economist of the International Monetary Fund, recently told reporters that “the worst is yet to come, and for many people, 2023 will feel like a recession”.
These companies that have shown historical resilience against an inflationary environment were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. A database of around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to quantify the popularity of each stock in the hedge fund universe.
10. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund Holders: 51
Dollar General Corporation (NYSE:DG) is a discount retailer that provides various merchandise products in the southern, southwestern, midwestern, and eastern United States. It is one of the best inflation stocks to invest in. Dollar General Corporation (NYSE:DG) remains a top development story in the retail space. The firm is investing in value-creating activities, has a cautious item blend, and even has the capability to pick up advertising share. The pledges to better estimating and private name offerings are likely to drive deals. The company’s regular low-price show is pulling in clients as well.
On August 29, Deutsche Bank analyst Krisztina Katai kept a Buy rating on the Dollar General Corporation (NYSE:DG) stock and lowered the price target to $265 from $266, noting that the company had good performance showcasing that it is one of the few stable retailers in a rocky retail backdrop.
At the end of the second quarter of 2022, 51 hedge funds in the database of Insider Monkey held stakes worth $2.4 billion in Dollar General Corporation (NYSE:DG), compared to 53 the preceding quarter worth $2.25 billion.
Just like Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and The Proctor and Gamble Company (NYSE:PG), Dollar General Corporation (NYSE:DG) is one of the best inflation stocks to buy now according to hedge funds.
In its Q3 2021 investor letter, LRT Capital Management, an asset management firm, highlighted a few stocks and Dollar General Corporation (NYSE:DG) was one of them. Here is what the fund said:
At LRT Capital Management we are continuously searching the market for great investment opportunities. Our favorite finds are companies with moats and growth opportunities that justify a higher price than what the stock is trading for. One of our holdings (approximately 1.5% of our long exposure) isDollar General Corporation (NYSE:DG), so today, we wanted to tell you a bit about this great company.
Company Overview:(Video) Warren Buffett Explains How To Invest During High Inflation
Dollar General is a discount retailer with the largest brick-and-mortar presence in the United States by store count. The company’s largest concentration of stores can be found in the southern, southwestern, midwestern, and eastern parts of the United States.10 Dollar General was founded in 1939 by J.L. Turner, who originally named the company “J.L. Turner and Son, Wholesale”. As the name suggests, the company began its life as a wholesaler, but quickly turned to a retailer of general store goods. By the early 1950s, the company had annual sales of $2 million per year,12 which is the equivalent of $22.95 million in 2021 dollars when adjusted for inflation (…read more)
9. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 54
3M Company (NYSE:MMM) operates as a diversified technology company worldwide. It is one of the top inflation stocks to invest in. Recent reports indicate that the company is planning to eliminate jobs in the safety and industrial division. This is part of larger plans to realign and reduce its structure, streamline its portfolio, and rethink business processes, per news publication Bloomberg.
On September 8, investment advisory Wells Fargo kept an Equal Weight rating on the 3M Company (NYSE:MMM) stock and lowered the price target to $125 from $144. Analyst Joseph O’Dea issued the ratings update.
In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and 3M Company (NYSE:MMM) was one of them. Here is what the fund said:
“We also bought back into3M (NYSE:MMM)as the stock reached attractive levels. We’d sold our shares in 3M last year when the price exceeded our estimated fair value, and as better opportunities to invest in presented themselves at the time. Nonetheless, we’ve always liked this business with its diversified revenues, its R&D leadership and its stable margins.”
8. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 56
Philip Morris International Inc. (NYSE:PM) is a company that makes and sells cigarettes in more than 180 countries across the world. It is one of the premier inflation stocks to invest in. The firm has an impressive dividend history. It has consistently paid a dividend to shareholders for thirteen years. These payouts have registered consistent growth in these thirteen years. On September 14, the company declared a quarterly dividend of $1.27 per share, an increase of 1.6% from the previous dividend of $1.25 per share.
On July 19, Jefferies analyst Owen Bennett kept a Hold rating on Philip Morris International Inc. (NYSE:PM) stock and lowered the price target to $99 from $107, stressing that near-term price performance will be driven by views around the Swedish Match deal.
At the end of the second quarter of 2022, 56 hedge funds in the database of Insider Monkey held stakes worth $6.8 billion in Philip Morris International Inc. (NYSE:PM), compared to 55 the preceding quarter worth $6.6 billion.
In its Q2 2022 investor letter, Artisan Partners highlighted a few stocks and Philip Morris International Inc. (NYSE:PM) was one of them. Here is what the fund said:
“On the positive side of the ledger, our top contributor was Swedish Match, a Swedish tobacco and nicotine products maker. The company received an all-cash takeover offer from rival Philip Morris International Inc. (NYSE:PM), which we also held in the portfolio, for SEK 106 per share—a 35% premium to Swedish Match’s prior closing share price. The deal is a good fit for PM as it reduces PM’s dependence on cigarettes—a category in steady decline—and accelerates the company’s transition to smokeless “reduced-risk” products (RRPs)—a category that has experienced rapid growth over the past five years. PM can also leverage its global scale to generate significant revenue synergies from these complementary product sets, as well as quickly gain access to the US market—the world’s largest market for RRPs and one where regulators have embraced RRPs and other less harmful nicotine products. We exited our position in Swedish Match as shares approached the takeout price.”
7. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 60
The Coca-Cola Company (NYSE:KO) is a beverage company that manufactures, markets, and sells various non-alcoholic beverages worldwide. It is one of the major inflation stocks to invest in. Reports indicate that the Japanese unit of The Coca-Cola Company (NYSE:KO) is in a new collaboration with Kirin Holdings Company for the development of a health drink that contains live bacteria that helps to boost immunity.
On September 06, HSBC analyst Carlos Laboy kept a Buy rating on The Coca-Cola Company (NYSE:KO) stock and raised the price target to $76 from $72, remarking that the firm might open a once-exclusive sales and delivery system to other brands.
Among the hedge funds being tracked by Insider Monkey, Nebraska-based firm Berkshire Hathaway is a leading shareholder in The Coca-Cola Company (NYSE:KO), with 400 million shares worth more than $25 billion.
In its Q2 2022 investor letter, Carillon Towers Advisers, an asset management firm, highlighted a few stocks and The Coca-Cola Company (NYSE:KO) was one of them. Here is what the fund said:
“The Coca-Cola Company(NYSE:KO) stock appreciated after management reported a strong quarter. Organic revenues advanced strongly and pricing came in ahead of expectations as well.”(Video) 5 Must-Have Investments When Inflation is High (Under 15 Minutes!)
6. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Walmart Inc. (NYSE:WMT) is an American retail and wholesale firm. It is one of the elite inflation stocks to invest in. Walmart Inc. (NYSE:WMT) announced on October 6 that it is set to make an agreement to acquire Alert Innovation. Alert Innovation is an e-grocery fulfillment automation company. Walmart Inc. (NYSE:WMT), with the help of two companies, has been piloting the Alphabot System since 2019. Alphabot operates within Walmart Inc. (NYSE:WMT) using autonomous carts to help fulfill online grocery deliveries.
On September 14, KeyBanc analyst Bradley Thomas kept an Overweight rating on Walmart Inc. (NYSE:WMT) stock with a $155 price target, highlighting that the firm was now under-earning due to grossly inaccurate inventory positioning.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Walmart Inc. (NYSE:WMT), with 9.8 million shares worth more than $1.2 billion.
In addition to Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and The Proctor and Gamble Company (NYSE:PG), Walmart Inc. (NYSE:WMT) is one of the best inflation stocks to buy now according to hedge funds.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Walmart Inc. (NYSE:WMT) was one of them. Here is what the fund said:
“The pandemic has created challenges for businesses large and small; one major challenge for large essential retailers such as ClearBridge holdings Home Depot,Walmart Inc. (NYSE:WMT)and Costco has been ensuring adequate staffing to meet demand under trying conditions. All three instituted enhanced pay practices during the pandemic, with raises, unplanned bonuses and other benefits helping compensate employees for their efforts in a difficult environment. In September 2020 Walmart raised wages for 165,000 employees, including a number of entry positions to $15 an hour. It followed this in February with a raise for 425,000 workers that moved its average pay above $15 an hour.”
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Disclosure. None. 10 Best Inflation Stocks to Buy According to Hedge Funds is originally published on Insider Monkey.
- 60/40 Stock/Bond Portfolio.
- S&P 500.
- Real Estate Income.
- Aggregate Bond Index.
- Leveraged Loans.
- TIPS. TIPS stands for Treasury Inflation-Protected Securities. ...
- Cash. Cash is often overlooked as an inflation hedge, says Arnott. ...
- Short-term bonds. ...
- Stocks. ...
- Real estate. ...
- Gold. ...
- Commodities. ...
I Bonds. One excellent inflation investment strategy that you can take advantage of in 2022 is to invest in I Bonds. These U.S. savings bonds earn interest based on a fixed interest rate and the inflation rate.
- Fine Wine. With rising inflation, fine wines also see increased prices, making them an excellent asset for your investment portfolio. ...
- Gold. ...
- Commodities. ...
- Real Estate. ...
- TIPS (Treasury Inflation Protected Securities) ...
- Stocks. ...
- Floating-Rate Bonds. ...
Consider equity investments
If you want to beat inflation or simply diversify your savings portfolio, equity investments may be a good choice. Equity investments mean you're investing money into a company by purchasing its shares, which are small pieces of the company. Shares are also referred to as stocks.
Treasury inflation-protected securities (TIPS), are a type of U.S. Treasury bond, designed to increase in value in order to keep pace with inflation. Because they're backed by the U.S. federal government, they're considered among the safest investments in the world.
The best way to increase purchasing power during a case of severe hyperinflation is to take out debt (in the currency before it hyperinflates) or to own stocks/businesses.
Gold has proven to be an asset class that preserves its value and acts as a hedge against inflation. When inflation rises, the value of paper money declines (also known as currency debasement), and commodities such as gold help protect against this because they have a limited supply.
- Peanut butter.
- Canned tomatoes.
- Baking goods – flour, sugar, yeast, etc.
- Cooking oils.
- Canned vegetables and fruits.
Basic Info. US Expected Change in Inflation Rates: Next 5 Years is at 2.90%, compared to 2.70% last month and 2.90% last year. This is lower than the long term average of 3.20%.
Cash is there to serve mainly as your emergency reserves, to cover unexpected bills, as well as job loss. Once you have your short-term bases covered, experts recommend investing in assets that have a chance to offer you compounding growth.
2. Equity and Commodity Investors. Despite low economic growth rates, investors can benefit from inflation if they hold the correct stocks and commodities in their portfolios. Equity investors: Putting your money in stocks is much better than holding cash during times of high inflation.
- Shop around for the best interest rate. ...
- Shift longer-term savings into equities. ...
- Choose your investments wisely. ...
- Maximise tax efficiency. ...
- Seek expert advice.
- Precious metals.
- Consumer staples.
- Property Real Estate Investment Trusts (REITs)