In this article, we discuss 5 best stagflation stocks to buy now. If you want to see more stocks in this selection, check out 10 Best Stagflation Stocks to Buy Now.
5. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 35
General Mills, Inc. (NYSE:GIS) is a Minnesota-based company that manufactures and markets branded consumer foods worldwide, offering ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, and nutrition bars. General Mills, Inc. (NYSE:GIS) is one of the best stagflation stocks to buy now, given its defensive nature. The packaged food sector got a boost from a solid beat-and-raise earnings report from General Mills, Inc. (NYSE:GIS) on September 21. Its profit guidance stood out prominently, which included an EPS growth of 2% to 5% versus an earlier expectation for 0% to 3% growth.
On September 22, UBS analyst Cody Ross raised the price target on General Mills, Inc. (NYSE:GIS) to $82 from $79 and maintained a Neutral rating on the shares after its Q1 earnings beat and the FY23 guidance raise. The analyst believes that the “beat and raise cycle” for the company will potentially last longer.
According to Insider Monkey’s data, 35 hedge funds were bullish on General Mills, Inc. (NYSE:GIS) at the end of Q2 2022, compared to 37 funds in the preceding quarter. Jim Simons’ Renaissance Technologies is the biggest stakeholder of the company, with 4.5 million shares worth $345.2 million.
Here is what Chartwell Investment Partners has to say about General Mills, Inc. (NYSE:GIS) in its Q2 2022 investor letter:
“In the Dividend Equity accounts, the three best performers in Q2 include General Mills (NYSE:GIS, 3.2%), up 12.2%. General Mills benefitted from the combination of being in a very defensive industry as well as demonstrating solid business momentum; margins have been particularly impressive, following price increases.”
4. APA Corporation (NASDAQ:APA)
Number of Hedge Fund Holders: 36
APA Corporation (NASDAQ:APA) is a Texas-based company that explores for, develops, and produces oil and gas properties. Heading into the winter, energy stocks like APA Corporation (NASDAQ:APA) will potentially continue to benefit despite a stagflationary economic backdrop. On September 14, APA Corporation (NASDAQ:APA) declared a $0.25 per share quarterly dividend, a 100% increase from prior its dividend of $0.13. The dividend is payable on November 22, to shareholders of record on October 21. The board of directors also authorized an additional 40 million shares for repurchase.
On September 19, Truist analyst Neal Dingmann raised the price target on APA Corporation (NASDAQ:APA) to $75 from $66 and reaffirmed a Buy rating on the shares. The stock’s outperformance is anticipated to continue as the company’s diversified operations generate robust free cash flows, as per the analyst. The analyst added that APA Corporation (NASDAQ:APA)’s operational and financial confidence is attested by the latest increase to its dividend along with an elevated share buyback program, with cash flows reaching levels that support a higher floor for management’s 60% payout formula.
Among the hedge funds tracked by Insider Monkey, 36 funds were long APA Corporation (NASDAQ:APA) at the end of June 2022, compared to 46 funds in the earlier quarter. Harris Associates is the leading position holder in the company, with 16.7 million shares worth about $582 million.
Here is what Oakmark Select Fund has to say about APA Corporation (NASDAQ:APA) in its Q1 2022 investor letter:
“Our oil holding, APA Corporation (NASDAQ:APA) (+54%) was one of our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”
3. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 46
Teck Resources Limited (NYSE:TECK) was founded in 1913 and is headquartered in Vancouver, Canada. The company acquires, develops, and produces natural resources in Asia, Europe, and North America. It operates through Steelmaking Coal, Copper, Zinc, and Energy segments. Commodities are safe investments amid economic slowdowns, which makes Teck Resources Limited (NYSE:TECK) one of the best stagflation stocks to buy now.
BMO Capital analyst Jackie Przybylowski on September 22 maintained an Outperform rating on Teck Resources Limited (NYSE:TECK) but lowered the price target on the shares to C$48 from C$50.
According to Insider Monkey’s data, 46 hedge funds held stakes worth over $2 billion in Teck Resources Limited (NYSE:TECK) at the end of Q2 2022, compared to 56 funds in the earlier quarter worth $2.6 billion. Eric W. Mandelblatt’s Soroban Capital Partners is the leading stakeholder of the company, with 13.6 million shares valued at over $416 million.
2. Nutrien Ltd. (NYSE:NTR)
Number of Hedge Fund Holders: 48
Nutrien Ltd. (NYSE:NTR) is a Canadian provider of crop inputs and services. The company offers potash, nitrogen, phosphate, and sulfate products, as well as crop nutrients, crop protection products, and seeds. Agriculture stocks are safe investments despite economic downturns, owing to their defensive nature.
Barclays analyst Benjamin Theurer on August 10 reiterated an Overweight rating on Nutrien Ltd. (NYSE:NTR) but lowered the price target on the stock to $105 from $126. The company reduced nitrogen guidance significantly this quarter, noted the analyst, who remains confident in Nutrien Ltd. (NYSE:NTR)’s retail business given its “strong 2022 performance and customer retention”.
Among the hedge funds tracked by Insider Monkey, 48 funds were bullish on Nutrien Ltd. (NYSE:NTR) at the end of June 2022, compared to 60 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with 8.4 million shares worth over $668 million.
Here is what Miller/Howard Investments had to say about Nutrien Ltd. (NYSE:NTR) in its Q1 2021 investor letter:
“For the most part, performance of the stocks within the Income-Equity Strategies was skewed towards the high-performing market sectors with two exceptions – our consumer discretionary and technology stocks both did better than their broad market peers… We bought Nutrien (NTR), a producer of fertilizer, which we believe should benefit from increasing crop prices.”
1. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 65
PepsiCo, Inc. (NASDAQ:PEP), a multinational beverages and convenient foods company, is one of the best stagflation stocks to buy now. As of September 20, in the last twelve months, PepsiCo, Inc. (NASDAQ:PEP) has recorded a revenue CAGR of 6.82% and a net income CAGR of 8.08%.
On August 22, Morgan Stanley analyst Dara Mohsenian told investors that he sees a clear top-line upside at PepsiCo, Inc. (NASDAQ:PEP), driven incrementally by accelerating U.S. scanner data quarter-to-date, compared to decelerating forward consensus estimates. This should result in EPS upside and continued stock outperformance. The analyst maintained an Overweight rating on PepsiCo, Inc. (NASDAQ:PEP).
Among the hedge funds tracked by Insider Monkey, 65 funds reported owning stakes in PepsiCo, Inc. (NASDAQ:PEP) at the end of June 2022, compared to 62 funds in the earlier quarter. Terry Smith’s Fundsmith LLP is the leading stakeholder of the company, with over 7 million shares valued at $1.2 billion.
Here is what ClearBridge Large Cap Value ESG Fund has to say about PepsiCo, Inc. (NYSE:PEP) in its Q2 2022 investor letter:
“Also in the stable and predictable cash flow camp, though with a very different business model, global food and beverage company PepsiCo (NYSE:PEP) reported very strong organic growth in the first quarter, driven by healthy price/mix, and raised revenue guidance, while holding EPS guidance. Notably, its beverage business showed expanding margins.”
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