Best Stocks To Own In An Inflationary Environment

Includes: AKS, AMZN, JPM, WMT
by: Adam Alvarez

From rising gas prices to improving sales numbers, a rising national deficit to dividend hikes by JP Morgan (NYSE:JPM), a weakening currency to a strengthening GDP number, the economy is throwing out a lot of mixed signals. However, one thing that remains clear is that inflation is coming to the forefront.

No longer viewed as just a possibility, the latest consumer price index number, or CPI, illustrated just how much of an effect higher gas prices are having on overall inflation. After rising 0.4% in February, or twice that of January, the CPI number is almost guaranteed to bring in a more frightening reading next month. After all, 80% of the rise in the reading was attributed to higher gasoline prices, while food prices remained unchanged according to the report. Given a few more weeks of surging gas prices, though, the rising food prices are sure to further elevate the index next month.

All of this should eventually lead investors scouring into positions best suited for an extended period of elevated inflation. Below are five stocks that are poised to thrive in such an environment.

  1. AK Steel (NYSE:AKS): After increasing prices for all carbon flat-rolled steel products by $50 per ton earlier this month, the company is already preparing for and capitalizing on the foreseen uptick in inflation. Also proving once again in the last few weeks to be able to bounce off support at $7 and seeing strength after the latest CPI reading last week, the shares have monumental upside as a result of being off over 50% their 52-week high.
  2. Walmart (NYSE:WMT): Back once again at $60, or the company's resistance level since 2000, nothing could push the shares over the hump faster than a drastic rise in prices. With earnings already expected to increase 10% year this year, the company is almost guaranteed a successful year even if inflation proves meek.
  3. Amazon (NASDAQ:AMZN): Although faced with an above average PE ratio, Amazon has numerous things working in its favor during such an environment. The online retailer provides solid deals and also an ability for customers to shop from home and save money on gas. Off 25% from the 52-week high, the company's upside remains strong.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.