5 Stocks That are Benefiting From Rising Inflation

1. JPMorgan Chase & Co. (NYSE:JPM)

Number of Hedge Fund Holders: 107   

JPMorgan Chase & Co. (NYSE:JPM) operates as a financial services firm. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in JPMorgan Chase & Co. (NYSE:JPM) with 7.4 million shares worth more than $1.1 billion. 

On January 18, UBS analyst Erika Najarian maintained a Buy rating on JPMorgan Chase & Co. (NYSE:JPM) stock with a price target of $197, noting that the near-term negatives for the bank now appeared to be out despite a “complex” 2022 outlook. 

As inflation rises, a hike in interest rates seems imminent. The hike would increase the earnings of JPMorgan Chase & Co. (NYSE:JPM) virtually overnight. This earnings boost will also result in more interest in the stock, driving up the potential gains on the shares. 

In its Q4 2020 investor letter, Bretton Fund, an asset management firm, highlighted a few stocks and JPMorgan Chase & Co. (NYSE:JPM) was one of them. Here is what the fund said:

“After a strong performance in 2019, we wrote this about our bank stocks in last year’s report: “There will be another recession sooner than later, and our banks will see larger loans losses, but we think this is more than priced into the stock, and our banks are well reserved for that eventuality.” Little did we know “sooner” really meant “a few weeks from now.” Despite the economic shock, the banks still have huge capital cushions that can absorb large loan losses. Our remaining bank investments, JPMorgan and Bank of America, increased their reserves significantly at the beginning of the Covid-19 crisis in anticipation of imminent loan defaults, but with the government stimulus and perhaps a more resilient economy than many would have guessed, actual loan losses are up only slightly. They might happen later in 2021, but with an additional stimulus package and the vaccine rolling out, the large-scale losses may not be as bad as most people predicted. The bigger drag on the banks’ earnings power is lower rates, which in our opinion will persist for a long time. Despite this drag, we estimate both JPMorgan and Bank of America will continue to grow revenue and earnings over the next few years, while we believe their stocks remain bargains in a somewhat expensive market. JPMorgan’s earnings per share declined 17% last year, and its stock returned -5.5%. Bank of America’s earnings, which are more sensitive to interest rates, were down 32%, and its stock returned -11.6%.”

You can also take a peek at 10 Stocks that Helped Warren Buffett Make $4.6 Billion in Dividends and 10 Best Dividend Stocks with Over 5% Yield According to Hedge Funds.

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