In this article, we discuss 5 best stocks to buy for deflation. If you want to see more stocks in this selection, click 10 Best Stocks to Buy for Deflation.
5. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 60
The Coca-Cola Company (NYSE:KO) is one of the best stocks to buy for deflation. In addition to its defensive nature, The Coca-Cola Company (NYSE:KO) is a reliable dividend payer. 2022 marks the 60th consecutive annual dividend increase by the company. The company declared a $0.44 per share quarterly dividend, in line with previous. The dividend is distributable on October 3, to shareholders of record on September 16. The Coca-Cola Company (NYSE:KO)’s dividend yield on September 23 came in at 3%.
On September 6, HSBC analyst Carlos Laboy raised the price target on The Coca-Cola Company (NYSE:KO) to $76 from $72 and reiterated a Buy rating on the shares. The company has new revenue drivers in Latin America as it opens its previously exclusive sales and delivery system to other brands, the analyst told investors in a research note.
According to the second quarter database of Insider Monkey, 60 hedge funds were bullish on The Coca-Cola Company (NYSE:KO), compared to 64 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 400 million shares worth over $25 billion.
4. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 70
Eli Lilly and Company (NYSE:LLY) is an American pharmaceutical company. Pharma and healthcare are some of the best sectors to invest in during deflationary periods, as patients cannot forego important medicines and urgent treatments despite slowed household spending. On September 22, Eli Lilly and Company (NYSE:LLY) announced that the FDA authorized its oral lung cancer medication, Retevmo, under the agency’s accelerated approval for specific adult patients with solid tumors. Eli Lilly and Company (NYSE:LLY)’s latest quarterly dividend per share of $0.98 was paid on September 9.
On September 22, UBS analyst Colin Bristow upgraded Eli Lilly and Company (NYSE:LLY) to Buy from Neutral with a price target of $363, up from $335. The analyst now sees Eli Lilly and Company (NYSE:LLY) as the most attractive name in large cap pharma, with the highest potential upside to estimates. With double digit top and bottom line growth for five years from a “diversified business” and lower patent issues compared to peers, Eli Lilly and Company (NYSE:LLY) “currently deserves a significant premium”, contended the analyst.
According to Insider Monkey’s data, 70 hedge funds were bullish on Eli Lilly and Company (NYSE:LLY) at the end of Q2 2022, up from 53 funds in the last quarter. Arrowstreet Capital is the largest stakeholder of the company, with 3.5 million shares worth $1.16 billion.
Here is what Baron Health Care Fund has to say about Eli Lilly and Company (NYSE:LLY) in its Q2 2022 investor letter:
“Eli Lilly and Company is a global pharmaceutical company focused on discovering, developing, and selling medicines for patients in the therapeutic areas of diabetes, oncology, immunology, and neuroscience. Stock performance was strong due to positive study results for Eli Lilly’s drug Tirzepatide (subsequently branded Mounjaro), which delivered up to 22.5% weight loss in adults with obesity. We think Tirzepatide is in the early innings of adoption in a large obesity market where penetration of anti-obesity medications is currently low. We continue to think Eli Lilly has a healthy base business with limited near-term patent expirations, a strong pipeline, and potential for significant margin expansion, which should translate to solid revenue and earnings growth over many years.”
3. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
The Procter & Gamble Company (NYSE:PG) is an American multinational consumer packaged goods company. The Procter & Gamble Company (NYSE:PG) has been paying a dividend for 132 years consistently since its incorporation in 1890 and has raised its annual dividends for 66 consecutive years. The latest quarterly dividend of $0.9133 per share was paid on August 15. The company delivers a dividend yield of 2.69% as of September 23.
Truist analyst Bill Chappell on August 1 reaffirmed a Buy recommendation on The Procter & Gamble Company (NYSE:PG) but lowered the price target on the shares to $160 from $175. Although the company’s Q4 earnings miss makes him somewhat cautious on the consumer environment, he also thinks that The Procter & Gamble Company (NYSE:PG)’s premium-priced portfolio will win against forex headwinds and relative conservatism, the analyst told investors.
Among the hedge funds tracked by Insider Monkey, The Procter & Gamble Company (NYSE:PG) was part of 71 public stock portfolios at the end of June 2022, compared to 72 in the earlier quarter. Ray Dalio’s Bridgewater Associates is the biggest shareholder of the company, with 6.7 million shares worth over $970 million.
2. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 71
AbbVie Inc. (NYSE:ABBV) is an American biopharmaceutical company. As healthcare remains one of the safest sectors despite economic downturns, AbbVie Inc. (NYSE:ABBV) is a significant stock to consider. The company also has a strong history of increasing dividends annually since its inception. AbbVie Inc. (NYSE:ABBV) declared on September 9 a $1.41 per share quarterly dividend, in line with previous. The dividend is payable on November 15, to shareholders of record as of October 14. On September 23, AbbVie Inc. (NYSE:ABBV) delivered a dividend yield of 3.94%.
JPMorgan analyst Chris Schott said on September 21 that AbbVie Inc. (NYSE:ABBV) remains one of his favorite large cap ideas as investors focus on Humira generics and the company’s trough earnings profile. The analyst continues to see a solid case for multiple expansion and maintains an Overweight rating on the shares with a $180 price target.
According to Insider Monkey’s data, 71 hedge funds were bullish on AbbVie Inc. (NYSE:ABBV) at the end of the second quarter of 2022, compared to 76 funds in the last quarter. Rajiv Jain’s GQG Partners is a significant shareholder of the company, with more than 3 million shares worth $467.6 million.
Here is what ClearBridge Investments specifically said about AbbVie Inc. (NYSE:ABBV) in its Q2 2022 letter:
“We added to our health care exposure in the quarter with the purchases of Straumann Holding (OTCPK:SAUHF), a Swiss manufacturer of medical instruments, implants and related supplies for dental procedures, in the secular bucket and U.S. pharmaceutical maker AbbVie Inc. (NYSE:ABBV) in the structural bucket. Straumann is the global market leader in dental implants with 29% overall share, a meaningful position within premium implants and smaller share in value implants. The company is also involved in clear aligners through a series of acquisitions as well as peripheral capital equipment around those businesses.
Growth will come from increasing share in both value implants and clear aligners through expansion in emerging markets on top of market growth in its premium implant business. AbbVie is undergoing a transition in anticipation of loss of exclusivity for its blockbuster Humira in the next several years with several commercial therapeutics, led by Skyrizi for psoriasis and Rinvoq for rheumatoid arthritis.”
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 72
The energy sector is one of the best defensive plays for periods of economic uncertainty, which is why Exxon Mobil Corporation (NYSE:XOM) is a premier stock to buy for deflation. The company has increased its annual dividend payment to shareholders for 39 consecutive years. Exxon Mobil Corporation (NYSE:XOM)’s last dividend of $0.88 per share quarterly dividend was distributed on September 9. The stock yielded 4.10% on September 23.
Piper Sandler analyst Ryan Todd on September 12 maintained an Overweight rating on Exxon Mobil Corporation (NYSE:XOM) and lowered the price target on the stock to $108 from $109, citing near-record distillate margins in the integrated oils group, which will continue to drive upside to refining estimates through the winter and into an “equally tight” 2023.
According to Insider Monkey’s data, 72 hedge funds were long Exxon Mobil Corporation (NYSE:XOM) at the end of the second quarter of 2022, compared to 83 funds in the last quarter. Jean-Marie Eveillard’s First Eagle Investment Management is a prominent stakeholder of the company, with approximately 20 million shares worth $1.70 billion.
In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:
“Integrated oil and gas giant Exxon Mobil Corporation (NYSE:XOM) performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industry wide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
You can also take a look at 10 Monthly Dividend Stocks with Highest Yields and 10 Best Consumer Discretionary Stocks To Buy.
