In this article, we discuss 10 best inflation stocks to buy according to hedge funds.
Inflationary pressures in the past few months have forced the Federal Reserve in the United States to raise rates five times this year. The total increase comes to about 3 percentage points, a figure expected to rise by 0.75 percentage points when the central bank meets again in three weeks. Inflation data from the Bureau of Labor Statistics continues to paint a bleak picture for the economy. Per latest numbers, the producer price index, a measure of prices that US businesses get for the goods and services they produce, increased 0.4% in September.
The increase excluded food, energy, and trade services and represented a 5.6% rise from a year ago. Food prices led to an increase in goods inflation, with a 1.2% monthly hike. Energy rose 0.7% after posting massive gains the previous two months. US President Joe Biden has played down risks of a recession in the US in the wake of these figures, telling CNN recently that he did not think the US would sink into a recession, but even if it did, he expected it to be a very slight one, remarking that finance experts predicted a recession every six months.
Investors who are anticipating a recession in the US economy have loaded up on some of the best inflation stocks like Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and The Proctor and Gamble Company (NYSE:PG) as the benchmark indexes continue to register declines. Pierre-Olivier Gourinchas, the chief economist of the International Monetary Fund, recently told reporters that “the worst is yet to come, and for many people, 2023 will feel like a recession”.
Our Methodology
These companies that have shown historical resilience against an inflationary environment were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. A database of around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to quantify the popularity of each stock in the hedge fund universe.
Best Inflation Stocks to Buy According to Hedge Funds
10. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund Holders: 51
Dollar General Corporation (NYSE:DG) is a discount retailer that provides various merchandise products in the southern, southwestern, midwestern, and eastern United States. It is one of the best inflation stocks to invest in. Dollar General Corporation (NYSE:DG) remains a top development story in the retail space. The firm is investing in value-creating activities, has a cautious item blend, and even has the capability to pick up advertising share. The pledges to better estimating and private name offerings are likely to drive deals. The company’s regular low-price show is pulling in clients as well.
On August 29, Deutsche Bank analyst Krisztina Katai kept a Buy rating on the Dollar General Corporation (NYSE:DG) stock and lowered the price target to $265 from $266, noting that the company had good performance showcasing that it is one of the few stable retailers in a rocky retail backdrop.
At the end of the second quarter of 2022, 51 hedge funds in the database of Insider Monkey held stakes worth $2.4 billion in Dollar General Corporation (NYSE:DG), compared to 53 the preceding quarter worth $2.25 billion.
Just like Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and The Proctor and Gamble Company (NYSE:PG), Dollar General Corporation (NYSE:DG) is one of the best inflation stocks to buy now according to hedge funds.
In its Q3 2021 investor letter, LRT Capital Management, an asset management firm, highlighted a few stocks and Dollar General Corporation (NYSE:DG) was one of them. Here is what the fund said:
“Executive Summary:
At LRT Capital Management we are continuously searching the market for great investment opportunities. Our favorite finds are companies with moats and growth opportunities that justify a higher price than what the stock is trading for. One of our holdings (approximately 1.5% of our long exposure) is Dollar General Corporation (NYSE:DG), so today, we wanted to tell you a bit about this great company.
Company Overview:
Dollar General is a discount retailer with the largest brick-and-mortar presence in the United States by store count. The company’s largest concentration of stores can be found in the southern, southwestern, midwestern, and eastern parts of the United States.10 Dollar General was founded in 1939 by J.L. Turner, who originally named the company “J.L. Turner and Son, Wholesale”. As the name suggests, the company began its life as a wholesaler, but quickly turned to a retailer of general store goods. By the early 1950s, the company had annual sales of $2 million per year,12 which is the equivalent of $22.95 million in 2021 dollars when adjusted for inflation (…read more)
9. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 54
3M Company (NYSE:MMM) operates as a diversified technology company worldwide. It is one of the top inflation stocks to invest in. Recent reports indicate that the company is planning to eliminate jobs in the safety and industrial division. This is part of larger plans to realign and reduce its structure, streamline its portfolio, and rethink business processes, per news publication Bloomberg.
On September 8, investment advisory Wells Fargo kept an Equal Weight rating on the 3M Company (NYSE:MMM) stock and lowered the price target to $125 from $144. Analyst Joseph O’Dea issued the ratings update.
In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and 3M Company (NYSE:MMM) was one of them. Here is what the fund said:
“We also bought back into 3M (NYSE:MMM) as the stock reached attractive levels. We’d sold our shares in 3M last year when the price exceeded our estimated fair value, and as better opportunities to invest in presented themselves at the time. Nonetheless, we’ve always liked this business with its diversified revenues, its R&D leadership and its stable margins.”
8. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 56
Philip Morris International Inc. (NYSE:PM) is a company that makes and sells cigarettes in more than 180 countries across the world. It is one of the premier inflation stocks to invest in. The firm has an impressive dividend history. It has consistently paid a dividend to shareholders for thirteen years. These payouts have registered consistent growth in these thirteen years. On September 14, the company declared a quarterly dividend of $1.27 per share, an increase of 1.6% from the previous dividend of $1.25 per share.
On July 19, Jefferies analyst Owen Bennett kept a Hold rating on Philip Morris International Inc. (NYSE:PM) stock and lowered the price target to $99 from $107, stressing that near-term price performance will be driven by views around the Swedish Match deal.
At the end of the second quarter of 2022, 56 hedge funds in the database of Insider Monkey held stakes worth $6.8 billion in Philip Morris International Inc. (NYSE:PM), compared to 55 the preceding quarter worth $6.6 billion.
In its Q2 2022 investor letter, Artisan Partners highlighted a few stocks and Philip Morris International Inc. (NYSE:PM) was one of them. Here is what the fund said:
“On the positive side of the ledger, our top contributor was Swedish Match, a Swedish tobacco and nicotine products maker. The company received an all-cash takeover offer from rival Philip Morris International Inc. (NYSE:PM), which we also held in the portfolio, for SEK 106 per share—a 35% premium to Swedish Match’s prior closing share price. The deal is a good fit for PM as it reduces PM’s dependence on cigarettes—a category in steady decline—and accelerates the company’s transition to smokeless “reduced-risk” products (RRPs)—a category that has experienced rapid growth over the past five years. PM can also leverage its global scale to generate significant revenue synergies from these complementary product sets, as well as quickly gain access to the US market—the world’s largest market for RRPs and one where regulators have embraced RRPs and other less harmful nicotine products. We exited our position in Swedish Match as shares approached the takeout price.”
7. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 60
The Coca-Cola Company (NYSE:KO) is a beverage company that manufactures, markets, and sells various non-alcoholic beverages worldwide. It is one of the major inflation stocks to invest in. Reports indicate that the Japanese unit of The Coca-Cola Company (NYSE:KO) is in a new collaboration with Kirin Holdings Company for the development of a health drink that contains live bacteria that helps to boost immunity.
On September 06, HSBC analyst Carlos Laboy kept a Buy rating on The Coca-Cola Company (NYSE:KO) stock and raised the price target to $76 from $72, remarking that the firm might open a once-exclusive sales and delivery system to other brands.
Among the hedge funds being tracked by Insider Monkey, Nebraska-based firm Berkshire Hathaway is a leading shareholder in The Coca-Cola Company (NYSE:KO), with 400 million shares worth more than $25 billion.
In its Q2 2022 investor letter, Carillon Towers Advisers, an asset management firm, highlighted a few stocks and The Coca-Cola Company (NYSE:KO) was one of them. Here is what the fund said:
“The Coca-Cola Company (NYSE:KO) stock appreciated after management reported a strong quarter. Organic revenues advanced strongly and pricing came in ahead of expectations as well.”
6. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Walmart Inc. (NYSE:WMT) is an American retail and wholesale firm. It is one of the elite inflation stocks to invest in. Walmart Inc. (NYSE:WMT) announced on October 6 that it is set to make an agreement to acquire Alert Innovation. Alert Innovation is an e-grocery fulfillment automation company. Walmart Inc. (NYSE:WMT), with the help of two companies, has been piloting the Alphabot System since 2019. Alphabot operates within Walmart Inc. (NYSE:WMT) using autonomous carts to help fulfill online grocery deliveries.
On September 14, KeyBanc analyst Bradley Thomas kept an Overweight rating on Walmart Inc. (NYSE:WMT) stock with a $155 price target, highlighting that the firm was now under-earning due to grossly inaccurate inventory positioning.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Walmart Inc. (NYSE:WMT), with 9.8 million shares worth more than $1.2 billion.
In addition to Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and The Proctor and Gamble Company (NYSE:PG), Walmart Inc. (NYSE:WMT) is one of the best inflation stocks to buy now according to hedge funds.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Walmart Inc. (NYSE:WMT) was one of them. Here is what the fund said:
“The pandemic has created challenges for businesses large and small; one major challenge for large essential retailers such as ClearBridge holdings Home Depot, Walmart Inc. (NYSE:WMT) and Costco has been ensuring adequate staffing to meet demand under trying conditions. All three instituted enhanced pay practices during the pandemic, with raises, unplanned bonuses and other benefits helping compensate employees for their efforts in a difficult environment. In September 2020 Walmart raised wages for 165,000 employees, including a number of entry positions to $15 an hour. It followed this in February with a raise for 425,000 workers that moved its average pay above $15 an hour.”
5. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 69
Oracle Corporation (NYSE:ORCL) offers products and services that address enterprise information technology environments worldwide. It is one of the best inflation stocks to invest in. Oracle Corporation (NYSE:ORCL) recently revealed that it was working closely with Teléfonos de México on a new project. The project involves the expansion of Oracle Cloud Infrastructure service to the customers across Mexico. Customers will be able to use OCI services to advance their applications and also in the closing of data centers.
On September 14, Berenberg analyst Nay Soe Naing kept a Hold rating on Oracle Corporation (NYSE:ORCL) stock with a $72 price target, saying that the mid-term opportunities and risks seemed balanced for the firm.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm First Eagle Investment Management is a leading shareholder in Oracle Corporation (NYSE:ORCL), with 25.9 million shares worth more than $1.8 billion.
In its Q2 2022 investor letter, First Eagle Investment Management, an asset management firm, highlighted a few stocks and Oracle Corporation (NYSE:ORCL) was one of them. Here is what the fund said:
“Oracle Corporation (NYSE:ORCL) is one of the world’s largest independent enterprise software companies and has been reinventing itself for the cloud-computing environment, a transition pursued primarily through investments in organic research and design and smallish, well-priced acquisitions. That said, Oracle in June closed its largest-ever deal with the acquisition of Cerner, a designer of software to store and analyze medical records and other healthcare data.
Oracle took on additional debt to finance this all-cash acquisition and as a result plans to moderate its stock-buyback program to focus on debt reduction. Despite the weak quarter for the stock, Oracle’s operations remain strong; it reported better- than-expected results for its most recent quarter and issued upbeat guidance for the coming fiscal year.”
4. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 70
Pfizer Inc. (NYSE:PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It is one of the top inflation stocks to invest in. Pfizer Inc. (NYSE:PFE) and BioNTech recently announced that they were joining Disney in a collaboration to promote COVID-19 vaccinations. The firms also announced the creation of a comic book named Everyday Heroes for the purpose.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm AQR Capital Management is a leading shareholder in Pfizer Inc. (NYSE:PFE), with 10.6 million shares worth more than $553.9 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Pfizer Inc. (NYSE:PFE) was one of them. Here is what the fund said:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer Inc. (NYSE:PFE) vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.”
3. The Proctor and Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
The Proctor and Gamble Company (NYSE:PG) provides branded consumer packaged goods worldwide. It is one of the premier inflation stocks to invest in. On October 10, Goldman Sachs analyst Jason English maintained a Neutral rating on The Procter & Gamble Company (NYSE:PG) stock with a $143 price target, underlining that the rating reflected a vigilant outlook on the group as well as company specific concerns that reveal market share headwinds could persist.
At the end of the second quarter of 2022, 71 hedge funds in the database of Insider Monkey held stakes worth $5.5 billion in The Proctor and Gamble Company (NYSE:PG), compared to 72 in the preceding quarter worth $6.1 billion.
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) researches and develops, manufactures, and sells various products in the healthcare field. It is one of the major inflation stocks to invest in. On October 07, Citi analyst Joanne Wuensch kept a Buy rating on Johnson & Johnson (NYSE:JNJ) stock and lowered the price target to $198 from $201, stating that the company’s Q2 results confirmed the large scale undercurrents, which incorporate the sizable swing in currency, continuous burden of expansion, and slacking elective strategy recovery.
Among the hedge funds being tracked by Insider Monkey, Florida-based firm GQG Partners is a leading shareholder in Johnson & Johnson (NYSE:JNJ), with 6.6 million shares worth more than $1.2 billion.
In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Johnson & Johnson (NYSE:JNJ) was one of them. Here is what the fund said:
“Johnson & Johnson (NYSE:JNJ) is currently our largest position and a long-standing holding. The majority of the group’s sales comes from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.
Here’s how JNJ make and spend a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics (…read more)
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories. It is one of the elite inflation stocks to invest in. Apple Inc. (NASDAQ:AAPL) has created a car crashing detection feature in its iPhone 14 pro. The Wall Street Journal reports that the iPhone’s new feature was triggered and automatically dialed 911 after the phone’s owner rode a roller coaster at an amusement park outside Cincinnati.
On September 29, UBS analyst David Vogt kept a Buy rating and a $185 price target on Apple Inc. (NASDAQ:AAPL) stock, stating that in spite of the industry softness, the wait times for the high-end iPhone models remain elevated.
At the end of the second quarter of 2022, 128 hedge funds in the database of Insider Monkey held stakes worth $143 million in Apple Inc. (NASDAQ:AAPL), compared to 131 in the previous quarter worth $182 million.
In its Q2 2022 investor letter, Alger Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc.(NASDAQ:AAPL) is a leading technology provider in telecommunications. computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. The engagement is fostering the growing purchase of high-margin services like music, apps, and apple pay. Apple’s shares detracted from performance as management lowered its guidance for the second quarter due to headwinds from the war in Ukraine, adverse foreign currency shifts, and dampened consumer demand associated with the coronavirus in China. Additionally, many investors were concerned that lockdowns implemented to curtail the spread of COVID-19 would impact production of apple products, however the manufacturing facilities have resumed activity.”
You can also take a peek at 10 Best Stocks to Buy According to Angela Aldrich’s Bayberry Capital Partners and Top 10 Tech Stocks to Buy According to Billionaire Louis Bacon.
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Disclosure. None. 10 Best Inflation Stocks to Buy According to Hedge Funds is originally published on Insider Monkey.
