7 Stocks That Are Good Inflation Investments
-
Loading... - Jerome Makris
- 12 Apr 2022
- 323 Views
- 0 Like
- 0 Comment
Buy these inflation stocks to protect your portfolio.
Analysts recommend these stocks as good investments in an inflationary environment.
The stock market recorded its first down quarter in two years to kick off 2022 as elevated inflation pressures American consumers. The consumer price index jumped 7.9% year over year in February, its largest gain since 1982. Even Federal Reserve Chairman Jerome Powell recently admitted that "inflation is much too high," and investors are growing increasingly concerned that inflation could be here to stay. Bank of America recently compiled a pro-inflation stock screen to identify stocks that have historically demonstrated a strong positive correlation with inflation. Here are seven inflation investments for investors looking to protect their portfolios.
Baker Hughes Co. (ticker: BKR)
Baker Hughes is an oilfield-services company that provides equipment and technology to the oil and gas industry. Analyst Doug Leggate says General Electric Co. (GE) should sell its remaining stake in Baker Hughes by July, and management will begin returning between 60% and 80% of free cash flow to BKR shareholders. Baker Hughes has the highest positive historical correlation to inflation of any stock Bank of America covers, and Baker Hughes' more than 50% year-to-date gain in 2022 suggests that correlation is alive and well. Bank of America has a "buy" rating and $44 price target for BKR stock, which closed at $37.52 on April 8.
BorgWarner Inc. (BWA)
BorgWarner supplies drivetrain systems and components to the auto industry. Analyst John Murphy is bullish on BorgWarner's Charging Forward initiative, which includes goals such as $2.5 billion in electric vehicle organic sales in 2025, $2 billion in mergers and acquisitions by 2025, and $3.5 billion in dispositions by 2025. Supply chain issues have disrupted the global auto industry. However, Murphy says BorgWarner's 7% decline in revenue in the fourth quarter was significantly better than the 15% decline in global auto production in the quarter. Bank of America has a "buy" rating and $65 price target for BWA stock, which closed at $36.41 on April 8.
Newmont Corp. (NEM)
Newmont is the world's largest gold producer, and the price of gold is up 6.8% in 2022. Gold is a classic inflation hedge, so it's no surprise Newmont shares are up 31% year to date. Analyst Michael Jalonen says Newmont management is prioritizing all the right goals, including reinvesting in the business, maintaining a strong balance sheet and returning capital to shareholders. Newmont management has said it expects production and costs to continue to improve each quarter through the end of the year. Bank of America has a "buy" rating and $75 price target for NEM stock, which closed at $82.12 on April 8.
