Should Investors Be Buying These Top Inflation Stocks This Week?
Inflation appears to be the name of the game in the stock market today and inflation stocks are now in the spotlight. Understandably, this would be the case as core price indexes continue to surge at eye-catching rates. In May, both consumer and producer prices accelerated at their fastest pace in over a decade. Arguably, this would impact most consumer-focused businesses amidst the current reopening trade. Logically, as the general costs of living and goods increase, consumers may not spend often, negatively impacting businesses. Because of this, investors could be turning towards defensive stocks that are more resilient in times of inflation.
Sure, some would argue that these changes are likely part of the transition of the economy back towards pre-pandemic levels. After all, businesses are reopening while consumers are getting vaccinated and eager to spend their stimulus checks. Nevertheless, there would be more conservative investors who are looking to diversify their portfolios should the current inflation trends persist. In fact, billionaire hedge fund manager Paul Tudor Jones suggests that investors look towards commodities, crypto, and gold in this case.
For the most part, this move could make sense for some. Commodities such as steel and copper would be safer bets because of surging demands in the construction industry now. As such, investors could be focusing on mining companies like Freeport-McMoran (NYSE: FCX). Elsewhere, with the value of fiat currency potentially dipping, cryptocurrency-focused companies such as MicroStrategy (NASDAQ: MSTR) would be a likely play as well. Now, FCX stock and MSTR stock are up by over 240% in the past year. One key similarity between the two would be that they are inflation stocks. Should you be looking to buy some yourself, here are three to know in the stock market now.
Best Inflation Stocks To Buy [Or Sell] Now
To begin with, we will be looking at the Nucor Corporation. For the uninitiated, the North Carolina-based company primarily operates in the steel industry. Notably, it is the largest steel producer and ‘mini mill’ steelmaker in the U.S. What is a mini-mill might you ask? Simply put, it is a facility that produces steel from recycled scrap metals. Because of its mini-mill operations, Nucor is also among the biggest recyclers of scrap in the North American region. Given its leading position in the steel industry, investors appear to be jumping on NUE stock now. It is currently sitting on gains of over 120% in the past year.
In its recent quarter fiscal report posted last month, Nucor saw green across the board. In detail, the company raked in a total revenue of $7.02 billion for the quarter. This was followed by mind-blowing year-over-year surges of 4,535% in net income and 4,328% in earnings per share. Not to mention, the company also ended the quarter with $2.46 billion in cash on hand, a 97% year-over-year bump. CEO Leon Topalian cited the company’s prior investments and strategic business approach as key growth factors for this record quarter.
Looking forward, Nucor’s current guidance for the second quarter of 2021 appears optimistic as well. Namely, the company believes it can achieve another record quarter with earnings per share soaring 1,205% year-over-year at the upper-end estimate. According to Nucor, this is supported by all three of its core operating segments “continuing to generate robust profitability.” This would be driven by overall strong demand and higher selling prices in the steel industry now. Given all of this, would NUE stock be a top buy for you now?Source: TD Ameritrade TOS
Coinbase Global Inc.
Another name in the inflation stock trade now would be Coinbase Global Inc. For some context, the company operates one of the largest cryptocurrency exchange platforms in the world now. With more cryptocurrencies gaining in popularity today, investors may not be too keen to go all-in on any particular one. Indeed, while digital currencies themselves may be prone to volatility, Coinbase merely facilitates related transactions. This could make COIN stock a top pick-and-shovel play on the industry now. Could now be the time for investors to buy in?
Well, Canaccord Genuity analyst Joseph Vafi seems to believe so. Yesterday, Vafi initiated coverage on COIN stock with a Buy rating, calling it the “super on-ramp” towards cryptocurrency. The analyst also puts COIN stock at a price target of $285 a share. Ideally, this would suggest a potential upside of 24.9% from its price of $228.05 as of Wednesday’s closing bell. Overall, Vafi believes that the “long-term investment considerations relative to COIN stock are attractive.” He cites the emergence of blockchain cloud and decentralized finance ecosystems as potential growth drivers in the future.
While analysts consider Coinbase’s growth runway in the years to come, the company remains busy as ever. Just this month, Coinbase has added five new cryptocurrencies for its Coinbase Pro users to trade. Impressively, these include the likes of the internet-famous Dogecoin (DOGE) and its prominent rival Shiba Inu (SHIB). Indeed, while the actual value of these digital currencies may be small, these are strategic plays by Coinbase. The company appears to be making the most of retail investor hype around cryptocurrencies. By and large, this could help further incentivize the adoption of cryptocurrency and blockchain finance tech in consumer markets. With Coinbase leading the charge in crypto, will you be adding COIN stock to your portfolio?Source: TD Ameritrade TOS
Quanta Services Inc.
Following that, we have Quanta Services Inc., a Texas-based infrastructure service provider. In short, the company’s core end-markets include the energy, pipeline, industrial, and communication industries. Generally, Quanta’s flagship services include the planning, design, installation, program management, maintenance, and repair of most types of network infrastructure. By the company’s estimates, it boasts the largest specialty contractor workforce in North America with operations spanning the U.S., Canada, and Australia.
With the importance of Quanta’s services in maintaining core infrastructure today, PWR stock could be another top inflation stock to watch now. Over the past year, the company’s shares have skyrocketed by over 130%. Despite all of this, Quanta does not seem to be resting on its laurels just yet. Earlier this month, Quanta made a major announcement regarding LUMA Energy, its joint venture with Canadian Utilities Limited. Specifically, LUMA is currently working on the operations and maintenance of Puerto Rico’s electric power transmission and distribution system. Given the scale of this massive deal, we could be looking at exciting times ahead for Quanta.
On top of all that, the company posted solid figures in its latest quarter fiscal last month. Quanta reported earnings per share of $3.07 on revenue of $11.20 billion for the quarter. The company also ended the quarter with over $184 million in cash on hand. CEO Duke Austin cites strong performance and safe execution across Quanta’s energy and underground utility divisions as key growth drivers for the quarter. In closing, he said, “Based on this performance and continued confidence in our ability to safely execute, we are increasing our full-year financial expectations.” Considering Quanta’s current momentum, would you consider PWR stock a good investment now?Source: TD Ameritrade TOS
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.