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5 ETFs & Stocks to Profit as U.S. Consumer Inflation Ticks Up

Sanghamitra Saha

The U.S. consumer price index, excluding volatile food and energy components, rose 0.3% in June, marking the largest increase since January 2018, following four successive monthly gains of 0.1%. Economists polled by Reuters forecast unchanged CPI for June.

The core CPI was boosted by strong increases in prices of apparel, used cars and trucks, as well as household furnishings, per an article published on CNBC. In the 12 months through June, the core CPI climbed 2.1% after advancing 2.0% in May. Expectations were pegged at a year-over-year rise of 1.6%.

Considering the inflationary environment, investors can bet on these ETF areas.

Real Estate

Since inflation in shelter costs (0.3% compared with 0.2% in May) is a significant reading, this real estate ETF should benefit from the trend. Plus, demand for real estate should rise in a decently-growing U.S. economy.

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iShares Mortgage Real Estate Capped ETF REM – The underlying FTSE NAREIT All Mortgage Capped Index measures the performance of the residential and commercial mortgage real estate, mortgage finance and savings associations sectors of the U.S. equity market.

Bluerock Residential Growth REIT Inc. BRG – The Zacks Rank #1 (Strong Buy) company operates as a real estate investment trust.

Retail

Inflation in Apparel (1.1% versus 0% recorded in May) is notable.

SPDR S&P Retail ETF XRT— Apparel retail makes up about 21.7% of the fund. So, it should benefit from rising inflation.

Buckle Inc. BKE — The Zacks Rank #2 (Buy) company is a leading retailer of medium-to-better-priced casual apparel, footwear, and accessories.

Healthcare

Medical care services saw inflation of 0.4% versus 0.5% in May. Though the price index for Medical care commodities fell 0.2% in June, the rate of decline was lower than what we saw  in May (0.4%).

Health Care Select Sector SPDRÂ ETF XLV — The Zacks Rank #2 (Buy) fund includes companies from the following industries — pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.

HCA Healthcare Inc. HCA — The Zacks Rank non-governmental hospital in the United States providing health care and related services belongs to a top-ranked Zacks rank (top 15%).

Auto

Inflation for new vehicles was 0.6% in June versus 0.1% in May, while inflation for used cars and trucks was 1.2% versus 1.6%.

First Trust NASDAQ Global Auto Index Fund CARZ — The fund looks to track the performance of the largest and most liquid companies engaged in manufacturing automobiles.

Ford Motor Company F — The Zacks Rank #1 American multinational automotive and mobility company belongs to a top-ranked Zacks industry (top 43%).

Restaurants

The food away from home index rose 0.3% sequentially from 0.2% in June. It rose 3.1% year over year, with the full service meals index rising 3.3% and the index for limited service meals increasing 3.0%. Restaurants companies should benefit from this trend.

Invesco Dynamic Food & Beverage ETF PBJ – The fund’s top 10 holdings focus on Starbucks and Yum! Brands (read: 5 ETFs to Profit From July Fourth Celebrations).

Chipotle Mexican Grill Inc. CMG — The Zacks Rank #1 restaurant serves a menu of burritos, tacos, and burrito bowls (burrito without tortilla) and salads, made using fresh ingredients. It comes from a top-ranked Zacks industry (top 38%).

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Bluerock Residential Growth REIT, Inc. (BRG) : Free Stock Analysis Report
 
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