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How to Profit in an Inflationary Climate

How to Profit in an Inflationary Climate

Coin stock with red arrow representing inflation.

It’s time to face the music.

Coin stock with red arrow representing inflation.

Source: Anton Watman/Shutterstock.com

Inflation has reached 40-year highs. The yield on the 10-year Treasury recently surpassed 2.3% for the first times since May 2019. The yields on the three-year, five year, and 20-year Treasuries are respectively at 2.38% and 2.71%, 2.6% and 2.6%.

In other words, the yield yield curve is basically flat. This means that yields across all sectors are very similar. When that happens, it could indicate we’re entering an economic slowdown. Atlanta Fed predicts that 1.3% GDP growth will occur in the first quarter.

Now, the Federal Reserve wants to lower this horrible inflation by increasing rates. As I reported, Last weekThe Fed approved an interest rate increase of 25% and indicated that it believes each of the six remaining FOMC meetings could offer an opportunity to raise rates further.

This caused panic selling but the market rebounded after Fed Chair Jerome Powell assured investors that the central banking would gradually raise key interest rates.

However, on Monday, Fed Chairman Jerome Powell took a more hawkish stance and said the Fed would go even further and raise rates by larger amounts if needed to reduce inflation that’s running “much too high.” That could mean the Fed will decide to raise rates more than anticipated at its next meeting — by a half a percentage point instead of a quarter percentage point.

The problem is that if the Fed goes too far with rate increases and the yield curve inverts — when long-term yields are less than short-term yields — it’ll hurt the economy and hurt the banks that the Fed regulates. The yield curve was briefly inverted twice this weeks, with the two-year Treasury yield moving higher than the five year Treasury and Wednesday morning when the five year Treasury rose above the 10-year Treasury.

Now, I’ve heard talking heads on the financial news recommend financial stocks. I urge you not to listen to them if you have. Folks, that’s a big mistake right now. Banks are not good investments in a flat yield curve environment like we’re in. Personally, I’m not a fan of the banks. I used to work in a government division that is now part the Federal Reserve. During my time there, I saw how they essentially “cook their books,” and that scarred me for life. Another problem with an inverted yield is that it also describes what happens before you enter recession.

The fact is that both the U.S. central banks and European central banks are facing a reckoning about their policy of unlimited currency printing known as Modern Monetary Theory. The question is: Can they dial that back?

I’ll tell you… I don’t think so.

And it’s why I think the Fed will move in baby steps.

I also think we’re going to have stagflation, where inflation will persist while the economy stays stagnant.

This high inflationary environment reminds me in some ways to the late ’70s and ’80s. It was an exciting period for the stock market. Stocks that are fundamentally superior Real estate is a great inflationary hedge.

Interesting fact: While the Fed is looking to raise rates, existing home sales declined 7.2% in February compared to the previous month and 2.4% compared with a year ago. In fact, February saw an increase in the supply of unsold homes. Potential buyers face rising interest rates and higher home prices.

Amidst all this Fed infighting and confusion, you are probably wondering… what is an investor to do?

Simply load up Stocks with fundamentally superior characteristics that can be used to hedge against inflationThey are succeeding in today’s market environment.

Choosing Superior “Inflation Hedge” Stocks

This is an example: Marathon Oil (NYSE:MRO).

The company was originally founded in 1887 as an oil production company (Ohio Oil Company). The business was an integrated oil company for the first 90 years. Marathon Oil began operating as an independent exploration company and production company in 2011 after the refining business was sold.

The company is primarily based in the U.S. and has facilities and wells in four of the most prolific oil-producing basins in America: Eagle Ford and Bakken, STACK/SCOOP and Permian Basin.

Marathon Oil had also proved 1,106 million barrels equivalent of oil equivalent per day at the end in 2021, which is a 14% increase over the previous year.

So, it’s not too surprising that Marathon Oil also exceeded analysts’ expectations for its top- and bottom-line growth in the latest quarter. Fourth-quarter revenue increased 24.1% year-overyear to $1.8billion, surpassing estimates for $1.54billion. Fourth-quarter earnings soared 97.4% year-over-year to $592 million, or $0.77 per share, which crushed analysts’ estimates for $0.55 per share by 40%.

The analyst community has raised its forecasts for the quarter after the better-than expected results. The analyst community now expects earnings to grow 200% year over year to $0.63 per shares, which is up from the $0.56 per share estimate. Positive analyst revisions are often preceded by future earnings surprises, as you probably know.

Marathon Oil is committed towards rewarding its shareholders. The company generated $2.2 billion of free cash flow in 2021. This includes $900 million during the fourth quarter. Marathon Oil then returned to investors more than 70% of its fourth quarter cash flow. The company’s first-quarter dividend of $0.07 per share will be paid on March 10 to all shareholders of record on February 16. The stock has a 1.3% dividend return.

I recommended the stock for my Growth InvestorAbout a month ago subscribers, and as you see below, Marathon Oil continues to earn top marks for my Portfolio Grader.

The company gets a Total Grade of “A,” a Fundamentals Grade of “B,” and a Quantitative Grade of “A,” representing institutional buying pressure under the stock.

So far this year, Marathon Oil’s stock has risen over 56%, crushing the S&P 500’s6.2% fell over the same time period.

Marathon Oil isn’t the only stock I see benefitting from the current inflationary climate.

As always, a strong offense is our best defense Stocks that are fundamentally superiorThat are prospering from inflation. It’s why I’m so excited about my Growth Investor stocks. I was expecting my Growth Investor stocks’ forecasted sales and earnings forecasts to decelerate due to more difficult year-over-year comparisons.

Thanks to new additions, however, Growth Investor Buy List. Plus, many stocks on the Buy List are excellent inflation hedges. Growth InvestorStocks are now characterised by a 51.4% annual sales growth rate and 370.9% annual earnings growth rate!

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This is why they’ve exhibited tremendous relative strength and are benefitting from quarter-end window dressing. The institutional investors are shoring up on my stocks because these are the stocks that will make their clients’ portfolios “pretty.”

I’m expecting similar performance to the six new stocks I will be adding to my Growth InvestorFriday Buy Lists After Friday’s close I will make public their names, tickers, as well as why I like them. Sign up for my to get in on the action early. Growth InvestorService now (If you join my Platinum Growth ClubOr Omnia Services, you will not only receive my most recent information but also my services. Growth Investor recommendations, but you’ll have full access to recommendations in all my other services, too. This includes Stocks that Breakthrough, Accelerated Profits, Power Portfolio 2022And Power Options.)

Three of the new stockholders are fertilizer companies that made a profit from the increase in natural gas prices as well as the disruption in fertilizer shipment from the Ukraine/Russian conflict.

Two new stocks include U.S. oil companies that profit from rising crude oil and natural gasoline prices. They also play a key role in helping to make the United States energy independent again. I am also adding a building material supplier who is benefiting from rising building materials prices.

This means that all our new purchases are poised for profit from the soaring inflation!

Click here to register as a member Growth InvestorSubscribe today.

P.S.Right now We are successful Americans because we have a bullseye on the back.

We’re facing a direct threat to our safety and prosperity.

We have lost the values we hold dear, such as individual freedom, hard work, and fiscal responsibility.

The US national deficit is increasing at an unprecedented rate. More spending is expected.

The price of essential goods is increasing every day. Critical materials are currently on backorder for many months. Grocery shelves are only half-full.

You can save money in the stock market, in a retirement plan, or cash under your mattress if you have any money. This should make your hair stand up..

To help understand the monumental problem we’re facing and why both our way of life and financial security are under attack, I made a special presentation.

If you want to be safe, then take these steps.  Your wealth will grow I encourage you to view this video now.

The Editor discloses that, as of the date this email, the Editor directly or indirectly owns the following securities:

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