3 Top Stocks To Buy On Inflationary Concerns

The market ended the week lower, ignoring the mostly upbeat earnings and economic data, out of concern for increasing COVID trends, particularly in India. While the economy and corporate earnings look strong, much of this information is likely already reflected in stocks. The consumer-discretionary sector was a bright spot on the day as Amazon (AMZN) posted better-than-expected earnings. Even with the drop today, most major indexes finished the month in the green.

Market Outlook

While economic data continues to be positive and corporate profits look strong, investors are still concerned about inflation, and rightfully so. As the economy gets back on track, consumer demand grows. This drives companies to buy supplies from producers to fill that demand. The producers then raise their prices. In March, for example, producer prices rose 4.2% year over year. This was the largest increase in ten years.

Consumer inflation is also running higher than usual. The Consumer Price Index (CPI) rose 2.6% year over year in March, its highest reading since 2018. This figure is expected to increase in the months ahead. Plus, one-year inflation expectations rose to 3.1%. This is the highest reading since 2014. So investors need to start considering inflation when making investment decisions.

That’s why I recommended companies with strong pricing power. These are companies that can raise the price of their products without impacting demand. In my opinion, the best way to find them is in the Nasdaq US Price Setters Index, which is made up of high-quality stocks with strong growth potential and pricing power. I ran a screen for stocks in the index with a Buy rating in our POWR Ratings system.

After a careful review of each company’s growth catalysts and fundamentals, I narrowed the list to the three below.

Lowe’s Companies, Inc. 

LOW is one of the world’s leading home improvement retailers, with about 1,970 stores throughout the United States and Canada. The company stores offer products and services for home decorating, maintenance, repair, and remodeling. The company has pricing power as it’s positioned to continue to capitalize on the demand in the home improvement market.

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