Inflation is affecting each of these consumer picks differently. Proceed with care.
With inflation at its highest rate since 1990, it’s not just
consumers that are feeling the pinch. Many stocks to watch in the consumer
products and retail spaces are feeling it as well. Sure, rising prices are
driving demand for some companies in the consumer staples sector, such as
discount stores. But between the cost of inventory, labor, raw materials and
shipping going up, increased sales may not correspond with increased profits.
At least across the board. Some companies have more
proactively passed along rising prices to consumers. Coupled with cost-savings
initiatives, some have also done a better job managing the unprecedented run-up
in prices. What’s more, a strong earnings season has helped bolster the
argument that fears of widespread inflationary pressures may be overblown.
However, if elevated rates continue into 2022, as consumer
companies such as Unilever (NYSE:UL) have started to warn their investors?
Results in the current quarter — and in the first few quarters of next year —
may be affected. Many investors may consider names in this area of the market
to be “safe harbors” compared to more speculative and volatile names. But you
may also want to pay close attention to how they’re handling these
not-so-“transitory” headwinds.
For these seven stocks to watch, keep an eye on how they’re
tackling inflation. Some of them stand to thrive in spite of it, while others
could struggle because of it:
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