In this article, we discuss the 5 stocks that are benefiting from rising inflation. If you want to read our detailed analysis of these stocks, go directly to the 10 Stocks That are Benefiting From Rising Inflation.
5. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 67
The Procter & Gamble Company (NYSE:PG) provides branded consumer packaged goods. Elite hedge funds are bullish on the stock. Among the hedge funds being tracked by Insider Monkey, London-based investment firm Cedar Rock Capital is a leading shareholder in The Procter & Gamble Company (NYSE:PG) with 6 million shares worth more than $985 million.
On January 20, Morgan Stanley analyst Dara Mohsenian maintained an Overweight rating on The Procter & Gamble Company (NYSE:PG) stock and raised the price target to $177 from $161, underlining that robust sales and market share results were “offsetting industry pressures” for the firm from a cost and foreign exchange standpoint.
The Procter & Gamble Company (NYSE:PG) will benefit from inflation since the company can pass on the increasing costs of goods to consumers. Since The Procter & Gamble Company (NYSE:PG) sells essential products and has a healthy brand name, this price increase is likely to be absorbed without affecting sales too much.
4. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 66
Bristol-Myers Squibb Company (NYSE:BMY) is a New York-based biopharmaceutical firm. The company posted earnings for the fourth quarter on February 4, reporting earnings per share of $1.83, beating market estimates by $0.03. The revenue over the period was $12 billion, up over 8% year-on-year.
Bristol-Myers Squibb Company (NYSE:BMY) stock stands to benefit from inflation since the company offers investors safe haven during times of crisis. This is reflected in the dividend history of Bristol-Myers Squibb Company (NYSE:BMY) that stretched back more than three decades. Over the past fifteen years, the dividend payouts have steadily increased regardless of market situation.
Top hedge funds hold large stakes in Bristol-Myers Squibb Company (NYSE:BMY). At the end of the fourth quarter of 2021, 66 hedge funds in the database of Insider Monkey held stakes worth $3.3 billion in Bristol-Myers Squibb Company (NYSE:BMY), compared to 74 in the previous quarter worth $4.7 billion.
In its Q4 2020 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Bristol-Myers Squibb Company (NYSE:BMY) was one of them. Here is what the fund said:
“Bristol-Myers Squibb recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”
3. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) makes and sells healthcare products. It is one of the favorite health stocks in the finance world. At the end of the fourth quarter of 2021, 83 hedge funds in the database of Insider Monkey held stakes worth $7.3 billion in Johnson & Johnson (NYSE:JNJ), compared to 88 in the previous quarter worth $6.8 billion.
On January 26, Raymond James analyst Jayson Bedford maintained an Outperform rating on Johnson & Johnson (NYSE:JNJ) stock and raised the price target to $185 from $178, noting that the stock seemed safe for 2022 given an attractive valuation and a more active capital deployment program.
Johnson & Johnson (NYSE:JNJ) is slated for a 60th straight consecutive dividend increase in the first quarter of 2022. Johnson & Johnson (NYSE:JNJ) is also one of the most trusted brands in the healthcare sector with a global reach, shielding the company from market fluctuations in one part of the world, and strong pricing power.
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 84
Bank of America Corporation (NYSE:BAC) provides banking and financial products. The stock stands to benefit as the rising rates will increase the earnings of the firm. On February 2, Bank of America Corporation (NYSE:BAC) declared a quarterly dividend of $0.21 per share, in line with previous. The forward yield was 1.79%.
Hedge funds have been piling into Bank of America Corporation (NYSE:BAC) stock in recent months. At the end of the fourth quarter of 2021, 84 hedge funds in the database of Insider Monkey held stakes worth $47 billion in Bank of America Corporation (NYSE:BAC), compared to 72 the preceding quarter worth $46 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Bank of America Corporation (NYSE:BAC) was one of them. Here is what the fund said:
“Higher long-term interest rates supported financials such as Bank of America, which has shown both defensive and offensive characteristics in the past year. We believe it continues to be the least risky large bank from a credit standpoint, with conservative underwriting and controlled risk taking, a leading consumer deposit franchise, scale and technology. It is also a leader in its commitments to sustainability, or as it terms it, responsible growth. Disclosure and reporting at all levels form a large part of this commitment, including gender diversity and equality, environmental commitments and support of communities in which it operates. In the first quarter Bank of America announced it is setting a goal of net-zero greenhouse gas (GHG) emissions in its supply chain and operations, and notably also in its financing activities, before 2050.”
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.
