Best Stocks That Will Keep Up With Inflation
Inflation can be a serious issue because it erodes the purchasing power of people's money. As a result, stock investors need to make sure that their rate of return will outpace the rate of inflation by choosing stocks that are well-suited for this.
You Need to Keep Up with Inflation
Some inflation is considered to be healthy. This is because it indicates that the economy is seeing strong demand. Otherwise, there would be deflation rather than inflation. Unfortunately, high levels of inflation can be extremely damaging because it eats into the purchasing power of money, which is why the real rate of return is the nominal rate of return minus the rate of inflation over the same period of time. Some stocks won't fare well with high inflation, but there are others that are much more promising in this regard.
McCormick
McCormick sells spices, seasonings, and other flavoring products. That might not sound very impressive. However, enough sales can make for very impressive numbers. In fact, it should be mentioned that McCormick has seen 35 years of consecutive dividend increases, which speaks of very reliable performance over time. Currently, it seems to be doing quite well, not least because of a strong portfolio of lucrative brands.
Nucor
Nucor is the single biggest manufacturer of steel and steel products in North America. In the present time, it is benefiting from higher steel prices. Interested individuals can't count on this to last forever, both because there are strong competitors and because there are substitutes for its products. However, the sheer demand that has been shown suggests that Nucor could do well for the next while. Besides this, it is interesting to note that the company has invested approximately $4 billion of its earnings into its operations in the last few years – something that is beginning to pay off in terms of its performance. On top of this, Nucor has been looking to strengthen its position, as shown by its recent acquisition of an insulated building panel producer that can use its products.
Freeport-McMoRan
Freeport-McMoRan is in a similar position to Nucor. In its case, it is benefiting from the high price of copper, which is a product of the economic recovery from the COVID-19 crisis. Said situation won't last. However, there are other reasons to be optimistic about its future. In particular, copper sees a lot of use in energy. Moreover, the metal is used at least four times more in renewable technologies than in non-renewable technologies, meaning that its price promises to benefit from the continuing growth in said sector. This doesn't mean that Freeport-McMoRan will be exempt from the business cycle in the times to come, but this is, nonetheless, reason to regard it in a positive light for now.