The specter of inflation looms large as last year witnessed the fastest rise in prices in over four decades. While there are signs of inflation waning, concerns remain regarding the stickiness of service costs.
To safeguard investment portfolios during uncertain times, investors can consider diversifying with stocks that have historically shown resilience in inflationary periods.
Here are three such inflation-resistant stocks that merit attention: Walmart, Progressive, and Visa.
Walmart: Weathering Inflation with Low-Cost Retailing Dominance
As inflationary pressures mount, consumers seek affordable alternatives, making low-cost retailers an attractive choice. Walmart, the world’s largest retailer, has demonstrated its resilience in such times.
With 10,500 physical stores across 20 countries and a robust e-commerce presence, Walmart offers a wide range of products, groceries, and discounted gasoline. Amidst last year’s inflation surge, Walmart experienced a 7% increase in comparable-store sales, while its membership-only warehouse club, Sam’s Club, saw a substantial 14.6% surge.
Additionally, Walmart’s e-commerce sales rose by 27% in the first quarter of this year, as it continues to innovate and leverage artificial intelligence to enhance its supply chain efficiency. These factors position Walmart as a dependable choice for investors seeking to combat inflationary pressures.
Progressive: Thriving in Inflation with Sound Underwriting and Innovative Technologies
Insurance stocks can be compelling during periods of high inflation, given the consistent demand for coverage. Progressive, an insurance company specializing in automotive and property insurance, stands out due to its excellent underwriting ability and innovative approach.
Leveraging telematics technology, which monitors driver behavior, Progressive has gained a competitive edge. The company’s use of telematics dates back to 2004, and its wide availability through Progressive Snapshot since 2010 has contributed to industry-beating profitability. By quickly adjusting premiums to match rising repair and replacement costs, Progressive’s net premiums earned rose by 11% last year and an impressive 25% from 2020.
These factors, coupled with its track record of success in various economic climates, make Progressive a promising investment choice amid elevated inflation.
Visa: Resilience in Payment Processing, Dominance in Global Transactions
Amidst inflation, payment processing remains a resilient business. Visa, a global leader in moving money across the world, stands as the preferred payment processor for numerous merchants. Visa’s appeal lies in its network effects, resulting in widespread adoption, and its asset-light business model, which contributes to remarkable margins.
Furthermore, Visa’s revenue growth and earnings per share increased by 12% and 14%, respectively, as of March 31, propelled by double-digit growth in payment volume. The company’s fee-based revenue structure, linked to payment volume, positions it favorably to benefit from inflationary periods.
Visa’s robust financial performance and ability to thrive in the face of inflation make it an attractive option for investors seeking stability.
Diversify Your Portfolio for Stability and Growth
Navigating periods of inflationary pressure requires strategic investment choices, and these three stocks offer potential insulation against economic uncertainty.
Walmart’s position as a low-cost retailer, Progressive’s ability to adapt and leverage technology in insurance, and Visa’s dominance in payment processing make them worthy considerations.
While the trajectory of inflation remains uncertain, diversifying a portfolio with these inflation-resistant stocks may provide investors with a sense of security and potential growth even in challenging times.
