Dividend Stocks

The New Norm: 7 Stocks to Buy for the Possibility of Permanent Inflation

We may have to deal with the unfortunate paradigm that these high prices may be permanent and if so, it’s best to start strategizing for inflation stocks to buy. You see, the Federal Reserve might not be able to work its magic anymore.

It’s something that I’ve been going back and forth on in my mind. However, it’s possible that we’re already at the level of inflation we would have seen if the Covid-19 crisis had not happened. I made the argument recently that when you consider the recent pre-pandemic growth rate of the M2 money stock, we were on a trajectory to reach the same level of “money printing” that we have right now.

In other words, the Fed may have already driven the money stock down to the lowest level possible without damaging the economy. So, why does it feel like we’re behind the curve? Here’s the thing: some folks have done really well post-pandemic and many others have not.

Driving prices down from here may cause deflation, which is also what the Fed doesn’t want to see. Given this reality, we may have permanent inflation. And that brings us to inflation stocks to buy.

Procter & Gamble (PG)

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As a consumer packaged goods manufacturer, Procter & Gamble (NYSE:PG) represents an ideal play for inflation stocks to buy. Because it provides the goods that we use every day, P&G enjoys permanent relevance. I have also made the argument for InvestorPlace that the company benefits from generational loyalty. People may use the brands that they grew up with as kids.

Interestingly enough, ChatGPT gave a similar argument. It stated that P&G is a company that features “strong brand loyalty and pricing power.” It’s hard to disagree. As one of the biggest companies in the world, chances are, you’ve used several of its brands. And again, because we need the essentials like toilet paper, the underlying business is predictable.

Analysts see the same thing. For fiscal 2024, they’re looking at earnings per share of $6.55, which is up 11% from last year’s print of $5.90. Also, revenue may land at $84.37 billion, up 2.9% from 2023’s tally of $82.01 billion. Combine these stats with a decent forward yield of 2.41% and you have a solid case for inflation stocks to buy.

Walmart (WMT)

Walmart (WMT) logo on a store front

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Big-box retailer Walmart (NYSE:WMT) arguably makes intuitive sense as one of the inflation stocks to buy. First, as a one-stop shop, it offers practically everything for everyone. That’s more significant than you might initially realize. In a competitive environment, you need to book deals whenever and wherever possible. So, if a customer buys something at Walmart on a whim, they’re not buying it anywhere else.

Further, Walmart is free for all shoppers. Without a membership required, you’re just going to get more volume. As people get laid off from their high-paying tech jobs, the retailer could enjoy a cynical boost because of its accessibility. Over the trailing 12 months (TTM), the company posted net income of $18.94 billion, or EPS of $2.33. Sales during the period landed at $657.33 billion.

For the current fiscal year, experts believe that EPS could rise almost 20% to hit $2.43. On the top line, sales may rise 13.7% to land at $676.55 billion. That aligns with an okay 1.25% forward yield, making it one of the reliable inflation stocks to buy.

Murphy USA (MUSA)

Murphy USA gas station and convenience store located on an out parcel of a Walmart Supercenter

Source: Lawrence Glass / Shutterstock.com

Speaking of Walmart, we’ve got to talk about Murphy USA (NYSE:MUSA). Based in El Dorado, Arkansas, Murphy USA operates a chain of retail gas stations. Primarily, these stores are located in proximity to Walmart retailers. That’s significant because people are also hurting in the downstream energy department. Let’s be real – if you’re shopping regularly at Walmart, there’s a good chance you’re not driving an electric vehicle.

I’m not casting any aspersions. While Walmart has attracted a larger number of individuals making six figures, the company tends to attract the core middle-income crowd. Since EVs are higher priced than their combustion-powered counterparts at the moment, Walmart shoppers likely drive combustion-based vehicles. That’s opportunistic for Murphy USA but that’s also what makes MUSA one of the inflation stocks to buy.

I need to warn you that analysts don’t share the same love that I have for MUSA. Instead, they pensively view shares as a consensus hold. For example, the average revenue target for fiscal 2024 is $21.64 billion, up only half a percent. Still, the cynical factor could swing the needle for MUSA.

Duke Energy (DUK)

The logo for Duke Energy (DUK) is seen on a sign at one of the company's offices.

Source: Jonathan Weiss / Shutterstock.com

In my opinion, Duke Energy (NYSE:DUK) makes an easy case for inflation stocks to buy. As a power and natural gas holding firm, Duke is an essential part of life for the regions that it covers. Basically, utility firms benefit from a concept known as natural monopolies. These enterprises are entrenched. While other companies can offer competition, they don’t bother due to regulatory challenges and other obstacles.

It’s terribly cynical when you think about it because practically speaking, Duke’s customers must pay up. Of course, people can choose to go off-grid but that invites its own set of challenges. Another factor that helps move the needle for DUK stock is the underlying forward dividend yield. At 3.92%, it definitely helps pad the overall narrative.

During the TTM period, Duke posted net income of $4.31 billion, translating to EPS of $5.59. Revenue reached $29 billion. For fiscal 2024, analysts are hoping to see EPS of $5.97, up 7.4% from last year’s print of $5.56. Also, sales could bump up 3.3% to reach $30.02 billion. It’s a great example of inflation stocks to buy.

Public Storage (PSA)

a Public Storage sign in front of a facility of storage buildings

Source: Ken Wolter / Shutterstock.com

Headquartered in Glendale, California, Public Storage (NYSE:PSA) is structured as a real estate investment trust or REIT. Per its corporate profile, Public Storage represents the largest brand of self-storage services in the U.S. That just about might make PSA one of the most compelling inflation stocks to buy. With people looking to downsize, this REIT should see increased demand.

Further, I’m not just referring to baby boomers looking for a smaller place to live while safekeeping their heirlooms. I mean, that is a powerful catalyst for PSA, no doubt. However, there’s another angle to consider. With younger folks finding it difficult to buy a home, they may be forced to rent in increasingly pricey apartment complexes. They can choose to downsize while doing the same thing: keeping big items in storage.

During the TTM period, net income landed at $1.94 billion, translating to EPS of $11.02. Revenue in the period reached $4.61 billion. For fiscal 2024, the high-side EPS target calls for $11.57. On the revenue front, the blue-sky forecast is aiming for $4.83 billion.

Wheaton Precious Metals (WPM)

Wheaton Precious Metals logo close-up on website page. WPM stock.

Source: Postmodern Studio / Shutterstock

Perhaps no story about inflation stocks to buy is complete without mentioning gold or gold-related investments. For that, market participants may want to consider Wheaton Precious Metals (NYSE:WPM). Wheaton specializes in the metals streaming business model. This involves providing mining firms with upfront cash in exchange for either all or part of the actual commodities extracted.

For Wheaton, one of the main benefits is better pricing predictability. Again, the contract and the terms are upfront so there are fewer surprises. That also theoretically helps in the volatility department. Gold miners tend to be wild and WPM helps cut some of the volatility down. Further, if prices continue to rise, WPM should generally rise with them.

In the TTM period, Wheaton’s net income landed at $590.29 million, translating to EPS of $1.30. Revenue during this time reached $1.1 billion. For fiscal 2024, analysts are projecting EPS to reach $1.33, up 12.7% from last year. On the top line, sales could rise 21.8% to hit $1.24 billion. It’s easily one of the inflation stocks to buy or at least to put on your radar.

PepsiCo (PEP)

Logotype of PepsiCo (PEP) against the blue sky

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A soft drink giant, PepsiCo (NASDAQ:PEP) really needs no introduction. It may not be quite as popular as its main rival but it’s a global powerhouse brand. As stated earlier, during a challenging economic environment, it’s important for companies to grab sales whenever they can. If brand loyalty or recognition is the catalyst that drives sales to Pepsi, so be it.

Another element that could figure into Pepsi’s rise as one of the inflation stocks to buy is demand for caffeine. The global coffee market could expand at a compound annual growth rate (CAGR) of 5.2% to 2030. On the other hand, the global energy drink market could expand at a CAGR of 8.3%. Apparently, the preference for consuming caffeine through soft drinks is booming. That should help PEP stock.

During the TTM period, Pepsi posted net income of $9.18 billion or EPS of $6.64. Revenue reached $91.88 billion. For fiscal 2024, analysts are targeting EPS of $8.17 on revenue of $94.48 billion. These figures represent a sizable improvement from last year’s EPS of $7.07 on sales of $84.9 billion.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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