5 Best Inflation-Proof Stocks

In this article, we discuss the 5 best inflation-proof stocks. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Inflation-Proof Stocks.

5. Altria Group, Inc. (NYSE:MO)

Number of Hedge Fund Holders: 47 

Altria Group, Inc. (NYSE:MO) is a tobacco company. The stock has benefited from the pandemic as cigarette sales registered a nominal increase for the first time in 20 twenty years, according to an FTC report on the industry. However, it has dipped recently after reports that Philip Morris, a Swiss-American tobacco firm, would be merging with Altria were quashed by Jacek Olczak, the CEO of the latter, in a media interview published on November 9. 

Jefferies analyst Owen Bennett has a Buy rating on Altria Group, Inc. (NYSE:MO) stock with a price target of $55. In an investor note penned in October, the analyst argued that a move for Juul, an electronic cigarette firm, appeared “likely and necessary” for Altria in the near future. 

At the end of the second quarter of 2021, 47 hedge funds in the database of Insider Monkey held stakes worth $948 million in Altria Group, Inc. (NYSE:MO), up from 38 in the previous quarter worth $1.1 billion.

In its Q2 2021 investor letter, Broyhill Asset Management, an asset management firm, highlighted a few stocks and Altria Group, Inc. (NYSE:MO) was one of them. Here is what the fund said: 

“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.

MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”