3 Top Stocks To Buy On Inflationary Concerns

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While positive economic and earnings data keeps rolling in, investors remain concerned over inflation. In an inflationary environment, investors should consider companies with strong pricing power such as Lowe’s Companies (LOW), O’Reilly Automotive (ORLY), and Pool (POOL).

As the market continues to hit new highs and many companies report better than expected earnings results, investors need to keep an eye on inflation. Multiple indicators point towards higher inflation ahead, which can erode the value of investment returns over time. But some companies can generate higher profits when prices rise.

That’s why we need to pick the right companies in this changing market environment. I suggest companies with higher pricing power. Meaning they have the ability to raise prices faster than their costs. This pricing power can help drive revenue growth and expand profit margins.

To find these companies, all we need to do is take a look at the Nasdaq US Price Setters Index, which includes quality stocks that exhibit growth potential and pricing power. When combined with our proprietary POWR Ratings system, we can unlock Buy-rated stocks such as Lowe’s Companies, Inc. (LOW), O’Reilly Automotive, Inc. (ORLY), and Pool Corporation (POOL) that have the pricing power to thrive in an inflationary landscape.  

Market Commentary

Stocks ended Monday mostly positive as investors were waiting on a slew of earnings and economic releases for the week. The S&P 500 added a new all-time high, while the Nasdaq Composite hit a new record level for the first time since February 12th. The market was flat on Tuesday. Although many companies released first-quarter results and the Federal Reserve’s two-day Federal Open Market Committee started on the day, the news didn’t translate into much market movement.

Stocks finished lower Wednesday as the Federal Reserve kept its monetary policy unchanged. Energy stocks did have a big day, though, as oil prices were up on demand optimism. The market reversed course on Thursday even as bond yields rose. The S&P 500 set a new closing record, and the Nasdaq Composite hit a new intraday high as traders digested the latest batch of earnings and economic data.

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