Five Stocks to Buy for Profiting from Inflation in 2022

As is the case with other commodities, it’s impossible to determine how much gold should be worth and whether the price of gold should go up or down in the future. At the end of the day, returns on gold are random, and investing at the right time is exceedingly difficult. Best investments for 2022 The dividend is small, about 0.8%, but investors might be encouraged that the company has grown it at about a 13% clip annually for the last decade. For really long-term investors, the growth in the dividend can pile up and produce spectacular cash-on-cash returns.

  • Known as a “discounter,” the grocery store and e-commerce giant sees inflation as an opportunity to gain market share and emphasize its commitment to value for customers.
  • The last time the Fed tapered a bond-buying program aimed at shoring up the economy, in 2013 and 2014, the stock market dipped in a so-called “taper tantrum” but recovered nicely.
  • Consider Invesco S&P 500 Equal Weight Financials (RYF, $66), an exchange-traded fund that gives as much weight to smaller, regional banks as it does to big money center institutions (it’s also a member of the Kiplinger ETF 20).

The bull case, however, is that the stock does not reflect the earnings growth and there’s more upside potential in the shares. Chipotle also continues to open new locations, many with the chain’s drive-through format, Chipotlane. These expansion efforts along with price increases contributed to third quarter revenue growth of 13.7% over the prior year. The third quarter adjusted diluted earnings per share of $9.51 beat analysts’ estimates by $0.40. UMH Properties, Inc. (UMH) is a REIT that owns and operates mobile home communities in New York, New Jersey, Pennsylvania, Maryland, Ohio, Indiana, Michigan, Tennessee, South Carolina and Alabama. Their prefab homes are attractive to those who might otherwise be priced out of the real estate market.

After the Consumer Price Index rose 9.1% in June, the largest increase in 40 years, inflation remained high despite aggressive rate hikes from the Federal Reserve. That trend continued in December as the Bureau of Labor Statistics reported the Consumer Price Index rose 6.5% on an annual basis, down from the 7.1% reported as of November. The consistent decline, albeit incremental, may be comforting to consumers and investors heading into 2023.

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François Locoh-Donou, F5’s president and chief executive officer, said the company’s strong fourth-quarter results cap a year of robust financial strength. Risks to attaining the price objective are an economic slowdown, elevated expense trajectory and slower-than-expected resolution of its consent orders with banking regulators. To outperform the price target of BofA for the bank, potential catalysts could include better-than-expected credit quality, i.e., loan losses and material expense management that improves future earnings. When inflation is high, people may give up their expensive vacations or dinners out, but they will still heat and cool their homes and offices. Precious metals, like gold and silver, tend to rise both in inflationary times and in times of market volatility.

  • Iger oversaw the launch of Disney+ in 2019 and likely doesn’t want to miss Chapek’s prediction.
  • Think somewhere a bit above 5,050 for the S&P 500, or north of 39,000 for the Dow Jones Industrial Average.
  • The company has an attractive dividend yield and has steadily boosted its payout over the last decade—8.3% per year.
  • “Perhaps the best expression of this view is the relative trade of defensive versus cyclicals which appears to still have a long way to go if we are right to be worried about growth.”
  • With prices rising, consumers have to reduce the amount of goods they buy, so companies are bringing in less revenue.

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The Conference Board, a business and economic research group, forecasts U.S. gross domestic product growth of 3.8% in 2022. That’s down from an estimated 5.7% in 2021 but well above the pre-pandemic trendline of 2.2% from 2010 through 2019. Kiplinger’s forecast of 4% growth in 2022 is more optimistic than the Conference Board’s. By 2023, many economists expect GDP growth to fall back to the 2% to 3% range. Economic growth, although deceler­ating from a strong reopening bounce, is expected to remain robust in 2022, with the U.S. leading global developed economies. The average price for a stay away from home skyrocketed higher by 20.5% YOY.

The five stocks to buy share characteristics of high quality, inflation-protected dividend yield, value rather than growth, free cash flow (FCF) generation and more, according to BofA Global Research. Other factors that led to their recommendation include fund positioning, the investment firm’s analysts’ 2022 earnings outlook versus consensus forecasts, as well as other catalysts. Energy and technology stocks have enjoyed the biggest upward earnings revisions, Wilson wrote, while the industrials and candle pattern forex consumer discretionary sectors have seen the biggest cuts to their Q1 earnings forecasts. The health of the American consumer is a big part of the story, says Ross Mayfield, investment strategy analyst at securities firm Baird. Consumers flock to value offerings as inflation bites their purchasing power, and Walmart stock is a perfect inflation stock to buy right now if investors expect high inflation to persist for longer. The business enjoys growing market share during troublesome inflation times.

Our editors are committed to bringing you unbiased ratings and information. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines  and the investing acciones en netflix methodology  for the ratings below. The five stocks to buy for profiting from inflation in 2022 are recommended by BofA to purchase and hold for the full year. Investors willing to follow that lead may find most of them fulfill their expected promise.

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That 13%-plus yield comes in the form ordinary income – so rather than the favorable long-term capital tax rates that qualified dividends face, this income is taxed at higher ordinary tax rates. So the smart play here is to hold PDBC in a tax-advantaged account like an IRA or Roth IRA. We like the United States 12 Month Oil Fund LP (USL, $35.82) – a fund we listed among our best energy ETFs this year. The USL invests in oil futures tied to West Texas Intermediate (WTI, aka U.S. crude oil), purchasing contracts over the next 12 months of futures. Of course, unless you plan on buying a barrel of oil and dragging it back to your garage, you’ll want to invest in the commodity via stocks and funds. Treasury Inflation-Protected Securities (TIPS) are designed to protect your investment from rising prices.

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“It’s fair to say the Fed missed the boat on inflation being transitory and was slow to tighten policy,” Wilson wrote. “In fact, Chair Powell has admitted as much. However, it’s also fair to say the bond market completely missed the boat, too.” “We continue to recommend defensives even though they have already had a great run of performance,” Wilson wrote. “Perhaps the best expression of this view is the relative trade of defensive versus cyclicals which appears to still have a long way to go if we are right to be worried about growth.” Kyle Woodley is the Editor-in-Chief of Young and The Invested, a site dedicated to improving the personal finances and financial literacy of parents and children.

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At midyear, the upper end of bullish 2021 price targets for the S&P 500 among Wall Street strategists reached the 4,600 mark. On Nov. 5 (the date for prices, returns and other data in this article), the index closed at 4,698. Like transportation stocks, auto rental stocks were affected by a global chip shortage. Value managers had more luck, as Kostin noted that 56% outperformed their value indices, above the historical average of 41%. The Mosaic Company’s stock is one of the best stocks to buy for inflation because it supplies basic primary agricultural inputs its customers can’t resist buying even as prices rise. The company has popular small-priced consumer snacks including Fritos, Walkers, Cheetos, Lays and Doritos that could show low price elasticity of demand if it adjusts prices for rising costs due to inflation.

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$10,000 invested in KO stock 10 years ago could have grown to nearly $25,000 today, with dividend reinvestments. Retail giant Walmart sells consumer brands that continue to perform well during inflationary periods. Known as a “discounter,” the grocery store and e-commerce giant sees inflation as an opportunity to gain market share and emphasize its commitment to value for customers. Buying inflation bonds, or I Bonds, is an attractive option for investors looking for a direct hedge against inflation.

How should you prepare your portfolio for inflation?

Higher interest rates encourage people to save money instead of borrowing and spending money (which drives up prices). As consumers spend less, companies have to lower their prices or at least raise them more slowly to encourage demand. And there are wildcards in oil markets that could drive prices higher. 2023 is sure to bring some economic and financial market surprises. Fortunately, there is a strategy that can insulate you from unexpected stock market declines. Dollar General actively returns value to shareholders through share repurchases and dividends.