Yahoo Finance 4 Stocks to Buy for Safe Returns Amid Rising Inflation
The Fed has been struggling to get a firm grip on soaring inflation. A resilient labor market, rising wages, higher personal income and spending have made things worse. People have been earning more, which is helping them spend more. Moreover, inflation, which had been showing signs of easing in the fourth quarter of 2022 is again on the rise to begin 2023.
Consumers are spending but cautiously. Thus, investors should place their bets on stocks like Albertsons Companies, Inc. ACI, Conagra Brands, Inc. CAG, General Mills, Inc. GIS and Ingredion Incorporated INGR that assure risk-adjusted returns right now.
Inflation Rises Once Again
Prices have been soaring at an alarming rate, be it housing, food or fuel. Personal consumption expenditures (PCE) price index, the Fed’s preferred measure for monetary policy, rose an alarming 0.6% in January, after climbing 0.2% in December. The PCE index has now increased 5.4% in the past 12 months through January.
More importantly, core PCE, which excludes volatile food and energy costs, also shot up 0.6% in January after increasing 0.4% in December. On a year-over-year basis, the PCE index rose 4.7% in January.
The report came days after the Labor Department said that the consumer price index (CPI) accelerated 0.5% in January and 6.4% year over year. Economists had been expecting a 0.4% monthly and a 6.2% year-over-year gain.
Core CPI, which excludes the volatile food and energy prices, rose 0.4% in January and 5.6% from a year ago.
This comes as data showed personal income and spending rose once again in January. U.S. personal income rose 0.6% in January after rising 0.3% in December. High income is helping people spend more.
Consumer spending, which accounts for two-thirds of U.S. economic activity, rose a staggering 1.8% in January, its biggest jump since March 2021. However, the good thing is that despite an increase in income and spending, consumers have been trying to save more. The personal saving rate increased to 4.7% in January from 4.5% in December.
However, the biggest challenge for the Fed is rising inflation, which has once again raised concerns about steep rate hikes continuing in the coming months. Since central bank authorities are determined to control the growth in the cost of essential goods and services, they may be forced to maintain their hawkish stance going forward.
The higher-than-expected jump in January's inflation has led market analysts to now forecast a 25-basis point interest rate hike in both May and June, according to the CME's FedWatch tool.
Rate hikes are never good for the economy, which is being threatened by an impending recession. Rate increases have an effect on consumer spending patterns, raise borrowing costs and hamper economic growth. It's possible that this is what caused major indices like the S&P 500 and the Dow to decline on Feb 14 when inflation increased unexpectedly.
Therefore, one should invest in stocks that deliver risk-adjusted returns.
Our Choices
These stocks belong to the consumer staples industries, or, to put it another way, their businesses are non-cyclical, which shields them from the vagaries of the market. They also pay dividends, which indicates high-quality business and helps them withstand market volatility.
Albertsons Companies is one of the largest food and drug retailers in the United States. ACI, with its robust local and national presence, occupies a prominent position in the industry and offers grocery products, general merchandise, health and beauty care products, pharmacy, fuel and other items and services.
Albertsons Companies’ expected earnings growth rate for the current year is 6.5%. The Zacks Consensus Estimate for current-year earnings has improved 7.3% over the past 60 days. ACI has a dividend yield of 2.3%. Albertsons Companiespresently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Conagra Brands is one of the leading branded food companies of North America. CAG offers premium edible products with a refined focus on innovation. Conagra Brands maintains a highly dynamic product portfolio and incorporates alterations within it per the preference pattern of end-users.
Conagra Brands’ expected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for current-year earnings has improved 9% over the past 60 days. CAG has a dividend yield of 3.6%. Conagra Brandspresently sports a Zacks Rank #1.
General Mills is a global manufacturer and marketer of branded consumer foods sold through retail stores. GIS also serves the foodservice and commercial baking industries. General Mills’ principal product categories include ready-to-eat cereals, convenient meals, snacks (including grain, fruit and savory snacks, nutrition bars, and frozen hot snacks), super-premium ice creams as well as baking mixes and ingredients.
General Mills’ expected earnings growth rate for the current year is 6.1%. The Zacks Consensus Estimate for General Mills’current-year earnings has improved 1.5% over the past 60 days. GIS has a dividend yield of 2.7%. General Mills has a Zacks Rank #2.
Ingredion is an ingredients solutions provider, specializing in nature-based sweeteners, starches and nutrition ingredients. INGR serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries.
Ingredion’s expected earnings growth rate for the current year is 14.1%. The Zacks Consensus Estimate for current-year earnings has improved 8.7% over the past 60 days. INGR has a dividend yield of 2.8%. Ingredion has a Zacks Rank #2.
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General Mills, Inc. (GIS) : Free Stock Analysis Report
Albertsons Companies, Inc. (ACI) : Free Stock Analysis Report
Conagra Brands (CAG) : Free Stock Analysis Report
Ingredion Incorporated (INGR) : Free Stock Analysis Report
