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3 stocks to buy for a hedge against inflation in 2024

3 stocks to buy for a hedge against inflation in 2024

In recent years, inflation has become a prominent topic in economic discussions, particularly with a noticeable rate increase following the pandemic. Despite a recent cooling off of inflation in the past months, investors remain concerned about the potential lasting impacts of elevated prices. These prevailing worries have prompted investors to actively seek out strategies and assets capable of providing a shield against high inflation, offering a sense of security.

Given these apprehensions, specific stocks exhibit the potential to navigate a high inflationary environment. Companies that capitalize on current economic, financial, and global trends support some of these stocks. Hence, Finbold has identified the following three stocks investors may consider acquiring to hedge against inflation.

Coca-Cola (NYSE: KO)

Coca-Cola (NYSE: KO) emerges as a resilient choice for investors seeking shelter from inflationary headwinds. As a global beverage giant with a diverse product portfolio, the company boasts a track record of robust business operations adept at navigating market risks.

The firm employs effective risk management strategies, including a foreign currency cash flow hedging program, to mitigate the impact of currency exchange rate fluctuations. This proactive approach underscores the company’s commitment to safeguarding its net cash inflows and outflows from adverse effects.

Coca-Cola’s iconic brand recognition and pricing power are key strengths. The company’s ability to pass on increased costs related to commodities, shipping, and wages to consumers enables it to maintain profit margins and sustain profitability, even in the face of inflation.

Historically, Coca-Cola has demonstrated consistent sales and profit growth across various economic conditions, earning the endorsement of Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) and BlackRock (NYSE: BLK). This confidence of institutional investors further underscores the company’s resilience in navigating economic uncertainties.

Looking at KO’s price projection for the next 12 months, based on 17 Wall Street analysts at TipRanks, the average price target is $63.88, with a high forecast of $69 and a low forecast of $60. This average price target represents an 8.62% change from the last price of $58.81.

KO 12-month stock forecast. Source: TipRanks

By the close of markets on Friday, December 29, KO was valued at $58.93, with annual losses of about 6%. 

KO one-year stock price chart. Source: Finbold

Exxon Mobil (NYSE: XOM)

Exxon Mobil Corp (NYSE: XOM), a prominent player in oil and natural gas exploration, production, refining, and marketing, finds itself well-positioned to counter the effects of rising consumer prices through exposure to tangible assets such as oil. 

Operating globally, the company benefits from strategic diversification, potentially shielding itself from economic fluctuations in specific regions and enhancing overall stability during inflationary periods.

Simultaneously, Exxon Mobil’s consistent history of dividend payments adds to its attractiveness. Companies with a reliable track record of distributing dividends are often preferred by investors seeking a steady income stream and a hedge against the eroding real value of money caused by inflation. Moreover, the oil and gas giants maintain a historically robust balance sheet, enabling them to invest in capital projects, manage debt effectively, and withstand market fluctuations – all crucial aspects during periods of inflation. 

The historical correlation between energy demand and inflation further positions Exxon Mobil favorably, as the company stands to benefit from increased energy demand during economic expansions.

Finally, according to 20 Wall Street analysts at TipRanks providing 12-month price targets for Exxon Mobil based on the three-month performance, the average price target is $129, with a high forecast of $150 and a low forecast of $113. This average price target represents a 29.28% change from the last recorded price of $99.78.

XOM 12-months stock forecast. Source: TipRanks

Over the past year, XOM stock has been down 6%. 

XOM one-year stock price chart. Source: Finbold

Microsoft (NASDAQ: MSFT)

Microsoft (NASDAQ: MSFT) exhibits a resilient business model marked by revenue diversification across multiple segments, providing a sturdy foundation in the face of economic fluctuations. Key revenue sources include cloud computing services like Azure, productivity tools like Office 365, personal computing products like Windows and Xbox, and involvement in initiatives like Open AI.

This diversified portfolio strategically positions Microsoft to weather uncertainties in the economic landscape.

A solid balance sheet emphasizes Microsoft’s robust financial health, historically a pivotal factor enabling the company to navigate challenging economic conditions. The company’s commitment to shareholder value is also evident through methods like dividends and share buybacks, strengthening its allure as an investment option. 

According to 37 Wall Street analysts providing 12-month price targets for Microsoft based on the last three months’ performance, the average price target stands at $423.45, with a high forecast of $600 and a low forecast of $375. This average price target reflects a 12.61% change from the last recorded price of $376.04.

MSFT 12-month stock forecast. Source: TipRanks

Indeed, MSFT has had a positive past year, gaining by almost 56%. 

MSFT one-year stock price chart. Source: Finbold

While the highlighted stocks possess qualities appealing to investors seeking stability in diverse market conditions, it’s crucial to recognize that no investment is entirely risk-free.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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