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3 Inflation-Resilient Stocks to Weather the Economic Turbulence

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Even after aggressive contractionary monetary policies by the federal reserve, inflation has remained relatively stubborn. Supply-chain issues and an increase in price of agricultural commodities are some factors that have contributed to high inflation. Data from the U.S. indicates that rising rents have contributed to higher inflation in the recent past. With macroeconomic headwinds coupled with inflation, it’s important to hold some inflation-resilient stocks in the portfolio.

Inflation-resilient stocks would typically represent companies that are unlikely to witness a decline in demand due to stubborn inflation. From an economic perspective, these companies would be largely in the business of selling necessity than luxury. When inflation impacts disposable income, consumers cut on their discretionary expense. Further, inflation-resilient stocks would also be commodities or metals that trend higher on the back of inflationary pressure in the economy.

Let’s discuss three safe and inflation-resilient stocks that are worth buying at current levels.

Newmont Corporation (NEM)

Gold bars and Financial concept, studio shots. Costco's gold bars, cost stock

Source: Misunseo / Shutterstock.com

Be it inflation, recession, geopolitical tensions, or expansionary monetary policies, gold is likely to perform well. It’s worth noting that the precious metal has sustained above $2,000 an ounce and I expect further upside in the scenario of expansionary monetary policies. Newmont Corporation (NYSE:NEM), a quality gold miner with an investment grade balance sheet, is worth considering.

After a steep correction of 30% in the last 12 months, NEM stock looks attractive at a forward price-earnings ratio of 15.9. The stock also offers a dividend yield of 3.2% and I expect healthy dividend growth if gold trends higher in the second half of 2024.

Currently, Newmont has 128 million ounces in gold reserves and 155 million ounces in gold resources. Further, the copper portfolio is 40Mt in reserves and resources. With a strong asset base and high financial flexibility, Newmont has clear production and cash flow visibility. Aggressive exploration activity will also ensure that reserves replacement is robust.

AstraZeneca (AZN)

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Source: shutterstock.com/Romix Image

AstraZeneca (NASDAQ:AZN), a biopharmaceutical company, is another name to add among inflation-resilient stocks. It’s worth noting that in the last 12 months, AZN stock has remained sideways. Considering the valuations, I expect a strong breakout on the upside after consolidation. It’s worth noting that AZN stock offers a dividend yield of 2.99%.

One reason to like AstraZeneca is an attractive pipeline of new molecular entities. Currently, the Company has 27 phase three trials initiated across 18 medicines. AstraZeneca also believes that at least 10 phase three trials have blockbuster potential.

The Company has also provided a positive guidance for 2024 with strong revenue momentum expected to sustain. With the likelihood of low double-digit growth in core EPS, the stock is undervalued after remaining sideways.

I must add here that in December 2023, AstraZeneca announced the acquisition of Lcosavax and Gracell Biotechnologies. Opportunistic acquisitions will continue to boost the Company’s pipeline and provide sustained growth visibility.

Lockheed Martin (LMT)

Hand pointing up and to the right with blue arrow, symbolizes growth stocks

Source: shutterstock.com/Lemonsoup14

Global defense spending increased on a year-on-year basis even during the pandemic year. This underscores the point that the industry is resilient to inflation and macroeconomic headwinds. Further, with geopolitical tensions remaining high, I am positive on some of the best defense stocks. Lockheed Martin (NYSE:LMT) is an attractive bet with the stock trading at a forward price-earnings ratio of 16.5.

Specific to Lockheed, the Company reported a record order backlog of $160.6 billion as of Q4 2023. The backlog provides clear revenue and cash flow visibility. For the current year, Lockheed has guided for free cash flow of $6.2 billion (mid-range).

Another point to note is that the order intake has been robust. The net backlog addition on a year-on-year basis has been positive and sets stage for accelerated revenue growth. With investment in innovation and a strong portfolio of advanced defense technology solutions, the outlook remains positive for Lockheed.

However, LMT stock has declined by 10% in the last 12 months. This is a golden opportunity to accumulate and I expect a strong reversal rally relatively soon.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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