4 Sector ETFs & Stocks to Benefit from Hot Inflation
In January, U.S. inflation topped expectations as persistently high shelter prices weighed heavily on consumers, according to a report released by the Labor Department on Tuesday. The consumer price index rose by 0.3% for the month, as reported by the Bureau of Labor Statistics.
On a year-over-year basis, the increase stood at 3.1%, a slight decrease from December's 3.4%. Economists surveyed by Dow Jones had anticipated a monthly increase of 0.2% and an annual gain of 2.9%. However, the actual figures surpassed these expectations, as quoted on CNBC.
Barring volatile food and energy prices, the core CPI accelerated by 0.4% in January, reaching a year-over-year increase of 3.9%, unchanged from December's figures. Projections had anticipated a monthly increase of 0.3% and a 3.7% rise on an annual basis.
Against this backdrop, we suggest a few sector ETFs that can be worth investing at the time of higher inflation. Below we highlight those.
Sector ETFs in Focus
Restaurants – AdvisorShares Restaurant ETF (EATZ)
Food-away-from home industry saw 0.5% sequential spike in inflation in January. The index for food-away-from-home increased 5.1% over the last year. The index for limited-service meals rose 5.8% over the last 12 months, and the index for full-service meals rose 4.3% over the same period.
Zacks Rank #1 (Strong Buy) Carrols Restaurant Group TAST is the largest BURGER KING franchisee in the United States, with over 800 restaurants and has operated BURGER KING restaurants since 1976.
Transportation – SPDR S&P Transportation ETF (XTN)
The transportation industry witnessed a 1% sequential rise in inflation in January. The space saw 9.5% rise in year-over-year inflation.
As far as important stocks are concerned, Zacks Rank #3 (Hold) FedEx FDX is the leader in global express delivery services. The company, founded in 1971, provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand.
Energy – iShares U.S. Oil Equipment & Services ETF (IEZ)
The energy sector, which includes oil and gas companies, has historically offered upbeat performance in a rising inflationary environment. Such firms beat inflation 74% of the time and delivered an annual real return of 12.9% per year on average, per a research report of Hartford Funds.
The revenues of energy stocks are tied to energy prices, a key component of inflation indices. This time also, rise in oil prices increased inflation globally. Oil prices rose lately as producers forecast demand growth and U.S. fuel stockpiles to declined.
As far as important stocks are concerned, Zacks Rank #2 Murphy USA MUSA is a leading independent retailer of motor fuel and convenience merchandise in the United States
Real Estate – Vanguard Real Estate ETF (VNQ)
Weighted shelter makes up 32.77% of CPI, of which 7.8% is rent and 23.68% is private housing, per data from MacroMicro. The shelter index rose 0.6% over the month after gaining 0.4% in December. The shelter costs were up 6% year over year.
The underlying MSCI US Investable Market Real Estate 25/50 Index is made up of stocks of large, mid-size, and small U.S. companies within the real estate sector. The fund yields 4.23% annually and charges 12 bps in fees.
The Zacks Rank #2 LTC Properties LTC is a health care real estate investment trust, invests primarily in long-term care and other health care related facilities through mortgage loans, facility lease transactions and other investments.
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FedEx Corporation (FDX) : Free Stock Analysis Report
LTC Properties, Inc. (LTC) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
Carrols Restaurant Group, Inc. (TAST) : Free Stock Analysis Report
Vanguard Real Estate ETF (VNQ): ETF Research Reports
iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports
SPDR S&P Transportation ETF (XTN): ETF Research Reports
AdvisorShares Restaurant ETF (EATZ): ETF Research Reports
