How wealthy would you say you are?
Fairly enough, there are different kinds of wealth. Unfortunately, the only kind that matters in the stock market is the one that involves money. And we all know good money doesn’t come easy these days, especially with the pandemic negatively affecting global economies. As a result, you’re most likely to pay more for the goods and services you already consume.
Because inflation involves the increasing of rates (did you know it’s currently at 8.6% – the highest in 40 years?!), it will become extra challenging for us to afford everyday commodities if our earnings don’t keep up.
Nonetheless, financial advisors tell us that there are still a few things we can smile about. For starters, inflation-resistant stocks almost always promise bright returns. When the economy shifts, investors, too, need to learn to adjust.
You know what they say: the only constant thing in this world is change.
That figured out, let’s start talking about inflation-resistant stocks! What exactly are they?
Inflation-Resistant Stocks
Well, they’re precisely what they sound like: stocks that are resistant to inflation. In other words, these are stocks we can still consider buying when the stock market is plunging.
Having said that, the next best question to ask is, “what companies then provide inflation-resistant stocks?”
To better understand the answer, let’s paint a picture: if people spend roughly S$1,000 a month on their necessities, then that means they’re bound to stop spending on things they can arguably survive without.
Simply put, the longer inflation is, the worse it will become for businesses. As a result, you’ll want to invest only in stocks that can still thrive during inflationary circumstances.
Naturally, industries that show promise during recessions are food and beverage, energy, healthcare, e-commerce, and real estate, to name a few.
That figured out, let’s go over 5 inflation-resistant stocks you may want to consider buying!
1. PayPal
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As the largest digital money transfer platform, $PayPal(PYPL)$ is one of the fastest-growing companies that remains profitable today. Boasting a track record of high sales growth since 2010, its current Earnings Per Share (EPS) rating stands at 81 out of 99. Not bad, right?
If an EPS Rating isn’t something you’re familiar with just yet, this measures a company’s capacity to expand profits in a year. This is determined by using the most recent two quarters and the past half five years of sales growth.
Additionally, experts tell us that PayPal’s efforts to enter the cryptocurrency space will prove to be a great source of revenue. And even when you’re not a huge crypto fan, PayPal’s Venmo should be a good enough reason for you to continue believing in the company’s potential. What started as a peer-to-peer payment service has now transformed into one of America’s leading digital wallets.
As a matter of fact, the PayPal-owned brand has over 429 million users! Clearly one of the most commercially successful fintech players today, PayPal is accepted by 76% of the 1,500 largest online merchants in Europe and North America.
2. Amazon
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You probably already knew Amazon was going to be on this list. When the virus scare first came out in 2020, the Jeff Bezos-owned company was a commercial hit. This is because it’s long been a popular retailer for both high and low-income earners. It doesn’t matter how large or small your budget is. There’s always something you can afford on Amazon.
What’s more, reports cite that $Amazon.com(AMZN)$ helped fast-track the cloud computing industry. The cloud computing space consists of servers, storage, databases, artificial intelligence, and more. As a result, the company has become an even bigger name in the business space.
To add, the company’s net sales grew by 22%. Compared to averaging $386.1 billion in 2020, Amazon amassed $469.8 billion in 2021. And mind you, this all happened when a global supply chain disruption was taking place.
Overall, Amazon’s net income for the whole of 2021 jumped to a staggering $33.4 billion. That’s a huge rise from making just $21.3 billion the year prior. Its EPS also climbed to $64.81 today, a stark difference from $41.83 in 2021.
3. Sanderson Farms
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Do you like chicken? If you do, then you might be familiar with this next company. $Sanderson Farms(SAFM)$ is one of the biggest poultry producers in America. And because food is essential, you can expect it to keep growing. In fact, Sanderson Farms holds a $4.5 billion market capitalisation today.
As food-at-home consumption became even more popular at the height of the coronavirus pandemic, Sanderson Farms saw the demand for their products grow as well. One of the stronger options in the market today, analysts say that the poultry processors will only keep expanding as work-from-home arrangements remain and inflation rates encourage more people to eat at home.
And though Sanderson Farms doesn’t seem to have life-changing innovations under its sleeves any time soon, experts still believe in the potential of the company.
When it comes to investments, the objective isn’t always to bet on the loudest trendsetters. Oppositely, the number one goal is to put in money where money is believed to abound. And right now, Sanderson Farms seems to be playing their cards right.
4. Coca-Cola Company
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There’s no denying how famous Coca-Cola is. You don’t even have to be a fan of the drink to be familiar with it. Undebatably one of the biggest beverage retailers in the globe, Coke claims to have a 14% market share in the entire beverage space.
Now, this may not seem like such a big number but considering how extensive the beverage industry is, you can say that’s a pretty big deal. With a market capitalisation worth $257 billion, there’s a lot to look forward to.
Still, the soda corporation has had its fair share of downs, too. Affected greatly by the pandemic’s forced temporary shutdowns of movie theatres and in-person dining, the company’s 2nd quarter’s revenue plunged 28% in 2020, a downfall seen to be Coke’s largest quarterly revenue decline yet in over 30 years.
Thankfully, Coca-Cola is happy to report a 16% year-over-year increase this year. Furthermore, 19 out of 27 Wall Street analysts also believe that, as of the 2nd quarter of 2022, the Coke stock is worth buying.
5. Alphabet
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Google’s parent company Alphabet may not immediately ring a loud bell to a lot of people. Still, Alphabet is one of the biggest brands to explore in the stock market today.
As both Android and Google continue to be strong players in their segments, there’s a lot of promise here. Android is reported to dominate more than 70% of the mobile operating system space. Meanwhile, Google remains the preferred desktop search engine of choice to an estimated 92.18% of users.
And as if that isn’t enough, Google’s YouTube also reports 2.6 billion active users as of June 2022. With a market capitalisation of $1.5 trillion, it’s understandable why Alphabet stays unbothered. And did we mention that it boasts an operating margin of 30.84%? This alone already implies how profitable the company is, even when expenses and wages are accounted for.
Digital services are soaring and our reliance on the web is practically irreversible at this point. Considering that reality, it’s fair to say that Google, YouTube, and Android are brands that are here to stay for much, much longer.
Should I invest now?
If you’re unsure about whether or not you should invest right now, then let this be your sign to start today! While the numbers may look upsetting in the near future, there are still plenty of reasons to plant your seeds as early as now. Like we always say, it isn’t about timing the market, but about your time in the market!
This is also precisely the reason why investing in financial literacy courses pays off. Considering how volatile the market is, it helps when you have mentors to turn to and a like-minded community to engage with. Sure, online articles and listicles can help, but there’s no replacing the value of real-time classes and courses.
Ultimately, the market is naturally volatile, and we have no personal control over how the economy turns out. The only thing we can do moving forward is to make decisions that benefit our future selves.
Having said all these, do you think you should start investing today?
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Disclaimer: All facts and opinions presented are for educational purposes only. This is not a recommendation to buy or to sell. Please do your own due diligence.
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