🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Top 10 Stocks to Buy as CPI Inflation Comes Roaring Back

Published 10/04/2024, 14:21
GEN
-
STT
-
CLF
-
HUM
-
CVS
-
COF
-
L
-
CHTR
-
INCY
-
TWLO
-
  • The March CPI report showed headline annual inflation rising 3.5% compared to the 3.2% reading seen in February.
  • As inflation makes a comeback, I used the InvestingPro stock screener to identify some of the best stocks to own amid the current market environment.
  • Despite a challenging near-term outlook, the stocks chosen for this list demonstrate attractive business metrics and strong Fair Value upside.
  • Looking for more actionable trade ideas? Join InvestingPro for under $9 a month for a limited time only and never miss another bull market by not knowing which stocks to buy!
  • Wednesday’s much-anticipated U.S. consumer price index (CPI) inflation report for March came in hotter than expected, providing further evidence that the Federal Reserve will be in no rush to start cutting interest rates anytime soon.U.S. March CPI

    Source: Investing.com

    The CPI rose 0.4% last month, matching the largest monthly increase since September. In the 12 months through March, the annual CPI increased 3.5%, above forecasts for 3.4%. That followed a gain of 3.2% in February.

    Excluding the volatile food and energy components, core CPI climbed 0.4% over the prior month and 3.8% over last year. The forecast had been for 0.3% and 3.7%, respectively.

    While headline CPI has come down significantly from a 40-year high of 9.1%, the data confirmed that the decline in inflation that began in the summer of 2022 has all but stalled.

    Taking a closer look at the chart below reveals that the annual CPI rate has been stuck in a range between 3.0% and 3.8% for the past nine months, highlighting the challenge faced by the Fed in the ‘last mile’ of its fight against inflation.U.S. CPI Y/Y

    Source: Investing.com

    The ‘last mile’, which is often the hardest to bring under control, refers to the final 1% or 2% of excess inflation that the Fed needs to overcome to meet its 2% target.

    Key Takeaway

    The Fed’s inflation battle is far from over.

    U.S. CPI inflation is still rising far more quickly than what the Fed would consider consistent with its 2% target range.

    Additionally, core inflation is proving stickier than expected and is anticipated to remain well above the Fed’s target for the foreseeable future.U.S. Core CPI Y/Y

    Source: Investing.com

    Furthermore, there is a growing risk that inflation might even go higher from here considering the recent spike in commodity prices.

    Taking that into consideration, the U.S. central bank will be in no rush to lower its key Fed funds rate after another hot inflation report.

    As such, I am sticking to my view that the Fed will not be cutting interest rates this year, with the first move now likely to only happen in Q1 2025.

    What to Do Now Now

    Did you know that your AI-powered stock-picking tool offers the best actively managed inflation-beating portfolios out there? For less than $9 a month with this link, you can safeguard your gains by following picks from our flagship strategy, Top Value Stocks, designed to provide you with a monthly selection of stable dividend-paying winners.

    By focusing solely on companies with solid balance sheets, our strategy has beaten the S&P 500 over the last decade by an impressive 707%. And the best part? With much less risk.Top Value Stocks Vs. S&P 500

    Subscribe now for less than $9 a month and see all the stocks in our strategies for sustained market outperformance!

    ProPicks is part of our premium InvestingPro feature, which also provides you with several other market beating tools, such as the InvestingPro screener.

    In fact, to help you successfully navigate through the uncertain macro backdrop, I used the InvestingPro screener to identify top-quality stocks with strong fundamentals and more upside ahead based on the Pro ‘Fair Value’ models.

    My focus was on diversified companies that are defensive and demonstrate solid profitability, a healthy balance sheet, strong growth prospects, and resilient dividend payouts thanks to their market-leading position.

    Here are the top ten stocks that could shape the investing landscape in the months ahead, based on the InvestingPro models.

    Top 10 Stocks to Buy Now as Per InvestingPro:

    1. Charter Communications (NASDAQ:CHTR): InvestingPro Fair Value Upside: +43.5%
    2. Humana (NYSE:HUM): InvestingPro Fair Value Upside: +41.7%
    3. CVS Health Corp (NYSE:CVS): InvestingPro Fair Value Upside: +40.9%
    4. Incyte Corporation (NASDAQ:INCY): InvestingPro Fair Value Upside: +39.3%
    5. Cleveland-Cliffs (NYSE:CLF): InvestingPro Fair Value Upside: +39.1%
    6. Twilio (NYSE:TWLO): InvestingPro Fair Value Upside: +38.3%
    7. Gen Digital (NASDAQ:GEN): InvestingPro Fair Value Upside: +37.3%
    8. Loews Corp (NYSE:L): InvestingPro Fair Value Upside: +37%
    9. Capital One Financial Corporation (NYSE:COF): InvestingPro Fair Value Upside: +36.3%
    10. State Street (NYSE:STT): InvestingPro Fair Value Upside: +35.6%

    InvestingPro Screener

    Source: InvestingPro

    With InvestingPro's stock screener, investors can filter through a vast universe of stocks based on specific criteria and parameters to identify cheap stocks with strong potential upside.

    InvestingPro empowers investors to make informed decisions by providing a comprehensive analysis of undervalued stocks with the potential for significant upside in the market.

    Readers of this article enjoy an extra 10% discount on the yearly and bi-yearly plans with the coupon codes PROTIPS2024 (yearly) and PROTIPS20242 (bi-yearly).

    Subscribe here and never miss a bull market again!

    InvestingPro Offer

    Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR S&P 500 ETF (SPY (NYSE:SPY)), and the Invesco QQQ Trust ETF (QQQ). I am also long on the Technology Select Sector SPDR ETF (NYSE:XLK).

    I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies' financials.

    The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.