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7 Stocks to Buy to Play the Rising Consumer Prices Trend

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·9 min read
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On a purely cynical and insensitive basis, some folks might think to themselves that the novel coronavirus pandemic has been a net benefit to them. And they’re not entirely wrong as statistically, the total impact of the global health crisis has been limited to what we initially feared at the onset. Nevertheless, rising prices have put a damper on any joy, necessitating a closer look at certain stocks to buy.

Yes, workers who have had the privilege of translating their occupation from the cubicle to the living room have enjoyed economic benefits. For a year or longer, worker bees saved on commuting costs, which prior to the pandemic imposed a toll on both costs and time. As well, they didn’t have to spend on office wardrobe upgrades. Yet investors now need to counteract rising consumer prices with stocks to buy from specific industries.

For one thing, the old adage applies: there’s no such thing as a free lunch. Sure, millions of Americans received a nice bonus — or a critical lifeline — through stimulus checks and the bolstering of unemployment insurance. However, that generosity didn’t originate from magic money. Instead, we’re going to pay for that through taxes and possibly a sustained period of rising inflation. Thus, investors need to protect themselves with particular stocks to buy.

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Another negative catalyst driving consumer prices to the moon is the ongoing global supply chain crisis. As I explained in my interview with CGTN America anchor Rachelle Akuffo, the supply chain problem is a holistic one. On the output and input (meaning consumer end and production end), inventory constraints dominate the discourse. Additionally, headwinds involving trucker drivers (the middle of the spectrum) affect the bottom line, creating implications for virtually all stocks to buy.

Finally, you have the workforce quitting their jobs for various reasons, though usually connected to pay, working conditions and benefits. Labeled the Great Resignation, this dynamic could mean higher consumer prices as employers open their wallets to attract talent. This too should impact the below stocks to buy.

While these stocks to buy can survive or even thrive during an inflationary period, keep in mind that such a dynamic is not guaranteed to pan out. Arguably, money velocity is dangerously low, which is more indicative of a deflationary threat. Either way, it’s important to perform due diligence before proceeding.

  • Wheaton Precious Metals (NYSE:WPM)

  • Kroger (NYSE:KR)

  • Coinbase (NASDAQ:COIN)

  • American Water Works (NYSE:AWK)

  • Applied Materials (NASDAQ:AMAT)

  • Sibanye Stillwater (NYSE:SBSW)

  • CarMax (NYSE:KMX)

Inflation-Resistant Stocks to Buy: Wheaton Precious Metals (WPM)

precious metals stocks Close up lump of gold mine on wooden table
precious metals stocks Close up lump of gold mine on wooden table

Source: Shutterstock

For stocks to buy to counteract rising consumer prices, I’m going to lead off with an obvious name, Wheaton Precious Metals. As you know, one of the most powerful forces behind the rise of metals — and commodities in general — is inflation.

I can’t say that I’m a big fan of precious metal fearmongers, who then turn around to sell you some overpriced subscription service. These folks pollute the internet as much as flat earthers, but hey, what are you going to do? However, it’s also important not to throw out the baby with the bathwater.

If you visit the U.S. Bureau of Labor Statistics’ website and play around with its inflation calculator, you’ll come across an incontrovertible truth: your dollar isn’t getting any more valuable, which cynically incentivizes investment and, in many cases, speculation.

The latter is especially unfortunate. However, if you want a trustworthy business in the precious metal streaming space, you should take a long look at WPM. Likely, it’s not going to make you rich, but it will probably shelter you from out-of-hand consumer prices.

Kroger (KR)

A Kroger (KR) logo on a building.
A Kroger (KR) logo on a building.

Source: Jonathan Weiss / Shutterstock.com

One of the companies that performed well due to the cynical relevance that stemmed from the Covid-19 pandemic, Kroger is enjoying another strong year in 2021. Since the January opener toward the final weekend before Thanksgiving, KR has gained over 27%, making it one of the better stocks to buy simply on merit, so to speak.

But as an investment specifically to counteract rising consumer prices, Kroger deserves strong consideration. Primarily, the company represents a mission-critical business. Obviously, human societies don’t do well without food and water. Second, no matter how bad things get, consumers will do whatever they can to secure the essentials, even if it means sacrificing purchases in other product or service categories.

If that wasn’t enough of a reason to add KR to your list of stocks to buy, the underlying financials make an awfully intriguing case. In the fiscal year ended Jan. 31, 2021, Kroger generated $132.5 billion, an outstanding result. So far this fiscal year, the company looks to post similar numbers, despite fears of the Covid-19 pandemic having faded drastically.

Inflation-Resistant Stocks to Buy: Coinbase (COIN)

The Coinbase (COIN stock) logo on a smartphone screen with a BTC token.
The Coinbase (COIN stock) logo on a smartphone screen with a BTC token.

Source: Primakov / Shutterstock.com

Initially, I was thinking about sticking an equity unit tied to traditional equity investments in the number-three slot for stocks to buy to mitigate rising prices. Certainly, Wall Street has been a major beneficiary of the new normal. Recall that prior to the pandemic, financial analysts bemoaned that young people were eschewing participation in equities for other endeavors.

Now, as the Wall Street Journal stated, everyone has become a day trader. Still, there’s one sector that can gives stocks to buy a run for their money.

I speak of course about cryptocurrencies. Along with their anti-government, anti-censorship stance, cryptos’ decentralized nature provides unprecedented inclusivity. So long as you have access to the internet (and assuming favorable governmental treatment), anyone can participate in digital assets.

But if you want to participate in this narrative through equities, you have two main choices: buy shares of a mining firm or a crypto exchange. Coinbase represents the latter, affording an intriguing proposition. Instead of betting which asset will rise higher, Coinbase is akin to selling tickets to the big game.

Since the crypto game in part involves inflation-risk mitigation, COIN seems a natural choice among stocks to buy.

American Water Works (AWK)

A zoomed in photo of a drop of water hitting a container of water's surface.
A zoomed in photo of a drop of water hitting a container of water's surface.

Source: Sambulov Yevgeniy/ShutterStock.com

I’m going to be blunt with you. Whether consumer prices were rising or falling, I probably would have stuck American Water Works on this list of stocks to buy. During a period of uncertainty — and I think that’s a fair description of the present juncture — utilities offer an excellent investment idea. But something as critical as water infrastructure? AWK really sells itself.

As with the essential goods argument, running water is an absolute necessity. Also, I’d qualify it as a small miracle. Easily one of the greatest achievements of mankind is fostering the ability for anybody to turn the faucet and enjoy streams of water on demand, so to speak.

Moreover, water scarcity is a massive problem that the international community must contend with. Various advocacy groups note that only 3% of the world’s water is fresh water and two-thirds of that amount is stuck in areas or conditions unfeasible for extraction.

Cynically, this translates to higher water prices. With localized problems weighing on the broader issue, it’s an inevitability. You can mitigate some of the risks by acquiring shares like AWK.

Inflation-Resistant Stocks to Buy: Applied Materials (AMAT)

Applied Materials company sign outside office
Applied Materials company sign outside office

Source: michelmond / Shutterstock.com

Billed as the global leader in materials engineering solutions for the semiconductor industries along with flat panels used in various digital devices, Applied Materials would have been one of the most relevant stocks to buy irrespective of any outside circumstances. Heck, the company is also important for the development of solar products, meaning that you can make an argument for AMAT being an ESG (environmental, social, governance) play.

However, the supply chain crisis has been a massive catalyst for Applied Materials, along with any other company tied to the semiconductor industry. During my interview with CGTN America, I mentioned that inventory constraints caused people to do their Halloween shopping in July and August, a simply unheard-of situation in any other context. Therefore, one can imagine the intense demand for products of consequence.

What’s more, in the company’s most recent earnings disclosure, management released a weak forecast, citing “supply-chain challenges.” Put bluntly, the company can’t keep up with the enormous demand wave, which caused investors to sell out of AMAT.

Still, over the long run, I think AMAT is one of the stocks to buy. I mean, where else are companies going to procure their materials engineering products?

Sibanye Stillwater (SBSW)

A pile of platinum rocks.
A pile of platinum rocks.

Source: Shutterstock

One of the most important precious metals producers in the world, you can acquire shares of Sibanye Stillwater for the same reason you might consider Wheaton Precious Metals. Rare, in-demand commodities tend to perform well during inflationary periods. Add in the fear of what may come next — for example, Covid-19 cases are rising again — and you have an excellent baseline incentive to add SBSW to your portfolio of stocks to buy.

But I also like Sibanye for another reason. According to its website, the company is the world’s largest primary producer of platinum and is the second-largest producer of palladium. Both metals are critically important to technology-based infrastructures. As well, their distinct properties offer significant implications for the electric vehicle revolution.

Further, you have a compelling geopolitical narrative that should support SBSW as one of the top stocks to buy to counter rising prices. Russia is the world’s largest palladium producer, which gives the country incredible power and influence, especially as the international community modernizes its infrastructure. However, U.S.-Russia relations are near all-time lows, which cynically bodes well for South Africa-based Sibanye Stillwater.

Inflation-Resistant Stocks to Buy: CarMax (KMX)

a Carmax (KMX) sign on a storefront
a Carmax (KMX) sign on a storefront

Source: Jonathan Weiss / Shutterstock.com

One of the worst side effects of the pandemic that relatively few talk about is that it made fools out of those who gave sound advice. For instance, when used car prices skyrocketed during the initial supply chain crunch, many advised that this too shall pass. Well, this too will pass but it definitely isn’t going to be in 2021. Maybe not in 2022 either.

That’s bad news for those who need to buy a car. Another problem unique to the pandemic: good advice was sometimes rendered null and void. Case in point is the used car market. Sometimes, used cars were more expensive than new ones of the same brand and model. That’s got to hurt the mind and the wallet. But you know who’s laughing all the way to the bank? CarMax.

While some financial gurus state that cars are liabilities, that’s not necessarily true in all cases. Heck, it might not even be true in most cases. That’s because in several states, you can’t do anything without a personal vehicle. Plus, CarMax knows that at some point, you can no longer hold off the purchase.

With no end in sight to these ridiculous prices, you might as well dance with the devil and buy KMX.

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.

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