Meanwhile, Credit Suisse and JPMorgan offered lists of stocks that can thrive in inflationary times like the present.
With inflation rampaging, investors are looking for stocks of companies that can withstand or even benefit from rising prices.
Consumer prices skyrocketed 8.5% in the 12 months through March. Some companies have been able to raise their prices to avoid the pain, lifting their stocks.
For example, travel stocks rose last week, with consumers apparently willing to pay up for trips after being stuck at home throughout the covid pandemic, The Wall Street Journal notes.
Airline, hotel and cruise shares gained. Delta Air Lines (DAL) – Get Delta Air Lines, Inc. Report sparked the rally when one of its executives said demand is so strong that the carrier would raise fares 7.5% to 10% in the second quarter.
Delta stock soared 15% last week. Hyatt Hotels (H) – Get Hyatt Hotels Corporation Class A Report climbed 11%. And Carnival Cruise (CCL) – Get Carnival Corporation Report gained 7%.
Credit Suisse Stock List
In February, Credit Suisse offered a list of the top stocks benefiting from inflation.
The bank calculated the stocks’ average daily return on days when inflation rose and on days when inflation had fallen over the trailing 12 months. The company’s inflation sensitivity score represents the difference between the return on up days minus down days.
The top 50 inflation beneficiaries in the S&P 500 include:
Exxon Mobil (XOM) – Get Exxon Mobil Corporation Report
Schlumberger (SLB) – Get Schlumberger NV Report
Dow (DOW) – Get Dow, Inc. Report
Las Vegas Sands (LVS) – Get Las Vegas Sands Corp. Report
Etsy (ETSY) – Get Etsy, Inc. Report
Norwegian Cruise Line (NCLH) – Get Norwegian Cruise Line Holdings Ltd. Report
Under Armour (UAA) – Get Under Armour, Inc. Class A Report
State Street (STT) – Get State Street Corporation Report
Capital One Financial (COF) – Get Capital One Financial Corporation Report, and,
SolarEdge Technologies (SEDG) – Get SolarEdge Technologies, Inc. Report.
The list is heavy on energy and financial companies.
J.P. Morgan Stock List
Also in February, J.P. Morgan created a list of stocks that it said were likely to outperform the market and a list likely to underperform when inflation fears or expectations are on the rise.
Among the stocks on the outperformers list are Bank Of America (BAC) – Get Bank of America Corp Report
Boeing (BA) – Get Boeing Company Report
Freeport-McMoRan (FCX) – Get Freeport-McMoRan, Inc. Report
General Electric (GE) – Get General Electric Company Report
American Airlines (AAL) – Get American Airlines Group, Inc. Report, and,
Avis Budget (CAR) – Get Avis Budget Group, Inc. Report.
Among the stocks on the underperformers list are Microsoft (MSFT) – Get Microsoft Corporation Report
Moderna (MRNA) – Get Moderna, Inc. Report
Walmart (WMT) – Get Walmart Inc. Report
Johnson & Johnson (JNJ) – Get Johnson & Johnson Report
Verizon Communications (VZ) – Get Verizon Communications Inc. Report
Procter & Gamble (PG) – Get Procter & Gamble Company Report, and,
Zoom Video Communications (ZM) – Get Zoom Video Communications, Inc. Class A Report.
Meanwhile, in an April 18 report, Morgan Stanley strategists, led by Michael Wilson said inflation will hamper corporate earnings going forward.
“We think the positive effects of inflation on earnings growth have reached their peak and are now more likely to be a headwind to growth, particularly as inflation forces the Fed to remain max hawkish,” they wrote in a commentary cited by Bloomberg.
Interest-rate-futures traders see a 74% probability the Federal Reserve will raise rates by at least 2.25 percentage points during the rest of the year.
“Margin expectations look overly optimistic for the balance of ‘22 given the myriad of cost pressures companies face,” the strategists said.
The author of this story owns shares of Exxon Mobil, Microsoft, Walmart, Johnson & Johnson and Procter & Gamble.
