Inflation is hot, and that’s chilling profits for many companies. But not all of them, and those are the values to collect now.
The latest consumer price index, released on Thursday, showed an annual inflation rate of 7.5%, higher than the 7.2% forecast by economists. Prices are rising at their fastest rate in 40 years. The Fed is now in inflation-fighting mode and appears poised to raise rates at least seven times by the end of the year, far more than was expected at the end of 2021.
Companies are trying to keep rising prices from hurting their profit margins, often with little success, as margins fell to 14.8% during the fourth quarter from 15.2% during the third quarter, according to Wells Fargo data.
But not everyone is suffering. Some companies can raise prices without destroying too much demand for their products, and those are the ones investors should want to own.
(ticker: CAT), for example, is lucky enough to have customers flush with cash from rising commodity prices, so it’s easy to make them pay. And pay they did. after reporting your latest financial results, management said prices had “rebounded” in the third and fourth quarters of 2021, helping earnings beat estimates by 17%. At $201.24, the stock is down 2.4% this year but outpaces the S&P 500’s 7.3% loss.
like the caterpillar,
(CNHI), which manufactures agricultural equipment, crushed earnings estimates—by 19%. On its earnings call, the company attributed the explosion to higher prices, especially in its North American business. They can thank the rising prices of agricultural products like soybeans and corn for that. The stock, at $16.15, is down 4.9% this year.
Procter & Gamble
(PG), which beat earnings estimates on January 19, it was also able to charge more for its products and plans to raise prices over the next year. That makes sense for a company that sells paper towels, diapers, toothpaste and other products that people really need. The stock, at $156.29, is down 4.5% this year, but if earnings pick up, that should change.
People don’t need what
(PM) sells, they just think they do, and that’s just as good. The cigarette manufacturer scored a profit hit on Thursday, it said it increased the prices of its traditional cigarettes and smokeless IQOS products, and management expects to keep raising prices throughout the year. His shares, at $107.96, have gained 14% this year.
write to Jacob Sonenshine in [email protected]