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Best Stocks to Battle Inflation Fears for May 2022

As such, we’ve seen big selling over the past six months by Big Money investors like institutions and pension funds. Inflation and equity downturns can be a nasty combo punch for investors, and we’re seeing it now.

Markets and Big Money in the Last Six Months

My research firm, MAPsignals, tracks the Big Money because we believe that’s what tends to move markets. Right now, there’s huge selling (red bars) and an almost complete lack of buying (blue bars):

But there have been some sectors doing well despite the mass market downfall. Three are energy, materials, and utilities. They’re rising because of inflation and the current geopolitical situation’s effect on supply chains.

But that doesn’t mean the only winners are there, just that those sectors are generally benefiting from current market conditions. See, when it comes to inflation, investors need stocks that can handle storms. Those tend to be strong, big companies with healthy balance sheets as well as pricing power that enables paying dividends. Here are five stocks that can go a long way to help battle inflation: ADM, MOS, CTVA, EOG, and JNJ.

Archer-Daniels-Midland Company (ADM) Analysis

Up first is Archer-Daniels-Midland, the agricultural commodities giant.

Companies with pricing power can do well in inflationary environments. With ADM focused on food staples and suffering from supply chain issues, it is experiencing elevated prices and strong demand at the same time. It’s weathered the storm well and pays a nearly 1.9% current dividend. Stocks like ADM are worthy of attention, especially on pullbacks. Check out Archer-Daniels-Midland:

  • 1-month performance (-10.8%)

  • Year-to-date performance (+25.0%)

  • Recent Big Money buy signals

To show you what our Big Money signals look like on a stock, have a look at all the buys in ADM over the past year:

Looking more broadly, Archer-Daniels-Midland has been a high-quality stock for years. The blue bars in the chart below show when ADM was a high-ranking stock likely being bought by a Big Money player, according to MAPsignals. When you see a lot of blue, like ADM has recently, it can be very bullish:

Source: www.MAPsignals.com

Those blue signals indicate Big Money buying and solid fundamentals. As you can see, Archer-Daniels-Midland’s sales and earnings growth have been strong, making it worthy of attention:

  • 1-year sales growth rate (+32.4%)

  • 3-year EPS growth rate (+19.1%)

The Mosaic Company (MOS) Analysis

Next up is Mosaic, a fertilizer and feed company that pays a nearly 0.8% current dividend.

Check out these technicals for MOS:

  • Year-to-date performance (+51.0%)

  • 1-month performance (-19.6%)

  • Recent Big Money buy signals

As markets have turned from growth to value and geopolitical tensions have risen, stocks in certain sectors, like materials, have benefitted. MOS is definitely one of those, as you can see the Big Money buying that’s been prevalent the last year:

Now let’s look long-term. Below are the top buy signals for Mosaic since 2009. The Big Money has been on it in waves:

Source: www.MAPsignals.com

Now let’s look under the hood. As you can see, Mosaic has had strong recent sales growth and owns a healthy profit margin:

  • 1-year sales growth (+42.3%)

  • Profit margin (+13.2%)

Corteva Inc. (CTVA) Analysis

Another inflation-beating name is Corteva, an agricultural firm focused on solving the world’s biggest food challenges. It currently pays a 1.0% dividend.

Strong inflation-beating stocks almost always have Big Money buying support. Corteva has had that in the past year, and its recent dip may provide an attractive buy opportunity.

  • Year-to-date performance (+13.0%)

  • 1-month performance (-10.3%)

  • Historical Big Money signals

Below are the blue Top 20 Big Money buy signals CTVA has made in the last year. Look at how Big Money drives up prices. That’s the JUICE!

Source: www.MAPsignals.com

Let’s look deeper. Earnings growth for Corteva has been impressive. I expect more of the same in the coming years. Its minimal debt is also encouraging for the future.

  • 3-year EPS growth rate (+121.9%)

  • Debt/equity ratio (+6.2%)

EOG Resources, Inc. (EOG) Analysis

Number four on the list is EOG Resources, which is a low-cost oil and natural gas company. It currently pays a dividend of slightly more than 2.5%.

Here are the technicals important to me:

  • 1-month performance (-2.6%)

  • Year-to-date performance (+36.5%)

  • Historical Big Money signals

With the energy sector on a rise for a while, EOG has seen a lot of Big Money buying:

Given that, it’s not surprising EOG Resources is a Big Money favorite recently. But it’s been like that for some time. Below are the Big Money Top 20 buy signals for EOG since 2004:

Source: www.MAPsignals.com

Let’s look under the hood. EOG Resources sales have jumped quite a bit and its profit margin keeps investors happy:

  • 1-year sales growth rate (+99.1%)

  • Profit margin (+23.6%)

Johnson & Johnson (JNJ) Analysis

Our last inflation beater is Johnson & Johnson, the health care giant. It’s involved in many aspects of health care and pays a nearly 2.6% dividend currently. JNJ has been strong since markets got rocky last fall:

Check out these technicals:

  • 1-month performance (-2.1%)

  • Year-to-date performance (+3.0%)

  • Historical Big Money signals

JNJ is a high-quality stock. It’s made the MAPsignals Top 20 buy report 113 times since 1990. As you can see below, it’s been a Big Money favorite:

Source: www.MAPsignals.com

Now let’s look below the surface a bit. JNJ sales have been growing, it’s highly profitable, and the stock is not too expensive right now:

  • 1-year sales growth rate (+13.5%)

  • Profit margin (+22.3%)

  • Forward price-to-earnings ratio (+17.2x)

Bottom Line

ADM, MOS, CTVA, EOG, and JNJ represent the best stocks to battle inflation for May 2022. This group has been able to handle volatile markets well. They’re strong, fundamentally-sound stocks that pay dividends and are set up for success in inflationary environments.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in EOG in personal and managed accounts.

Contact

https://mapsignals.com/contact/

This article was originally posted on FX Empire

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