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Chicago, IL – July 15, 2021 – Zacks.com announces the list of stocks featured on the Analysts Blog. Every day, the analysts at Zacks Equity Research discuss the latest news and events that affect stocks and the financial markets. Stocks recently featured on the blog include: RPT Realty RPT, American Homes 4 Rent AMH, NexPoint Residential Trust, Inc. NXRT, and Newmont Corporation NEM.
Here are the highlights from Wednesday’s analyst blog:
4 stocks to break the biggest spike in inflation since 2008
The cost of living in the United States accelerated at the fastest pace in more than a decade in June as the economic recovery from the coronavirus pandemic picked up. The Department of Labor, citing a MarketWatch article, found that the index of consumer prices (CPI) was up 5.4% year over year, its highest 12-month jump since August 2008, when the price of oil hit a record $ 150 a barrel .
The Department of Labor added, citing an article in the WallStreet Journal, that CPI was 0.9% higher than May last month, the largest increase in a month since June 2008. In fact, excluding the volatile categories, the core CPI rose Food and Energy up 4.5% year over year and is now at a 29-year high, as mentioned in the MarketWatch article.
Interestingly, economists had expected inflation to rise less in June. So what drove the huge increase in the cost of goods and services last month? Many believe that the sharp rise in consumer prices is usually due to increases in the prices of used cars and trucks, as well as airfares. The cost of such used cars rose 10.5% last month after seeing massive gains of 7.3% and 10% in May and April, respectively, citing the MarketWatch article.
As a larger number of customers buy cars and trucks due to delivery bottlenecks, car dealers in particular are demanding more. Similarly, the airfare index skyrocketed as more passengers took to the skies thanks to the reopening of the economy and the easing of travel restrictions.
Not only airlines and vehicles, but also the prices in hotels and restaurants rose due to the higher frequency of visitors. Incidentally, gas prices have been rising for some time and made a significant contribution to inflation in June. Worryingly, the recent rise in food prices has raised concerns that inflation is in fact spreading across the economy.
Still, inflation not only rose in June, it is also expected to rise in the near future. This is because robust short-term consumer demand, which relies on an increase in vaccination rates, an end to business restrictions, a range of government financial relief, and an increase in household savings, is sure to result in rising prices for goods and services becomes.
In fact, consumers expect higher inflation. Citing the WallStreet Journal article, the University of Michigan consumer survey found that the average inflation rate consumers expect in five to ten years from that date was 2.8% last month.
But a surge in inflation doesn’t bode well for stocks. The biggest surge in inflation in years has spiked bond yields, undermining the attractiveness of growth stocks. Investors shouldn’t feel downcast, however. There are stocks that tend to do well when the cost of living goes up, which should be attractive enough for investors to watch right now.
The rise in inflation leads to an increase in house prices. In addition, landlords can demand higher rents as the value of the property increases. Hence, real estate is an obvious choice and can be acquired indirectly through investments in Real Estate Investment Trust (REIT). Likewise, the demand for gold increases in times of rising inflation. As the yellow metal tends to appreciate in value, investors may consider keeping an eye on gold mining stocks.
So we’ve highlighted four such stocks from the above areas that are worth a look for now.
RPT real estate works as a real estate investment trust. The company owns, develops, acquires, manages and rents regional shopping centers, community shopping centers and single-tenant properties. The company currently ranks # 2 (Buy) in Zacks. The company’s expected earnings growth rates for the current year and next are 10.3% and 15.1%, respectively. Additionally, the company’s projected earnings growth rate for the next five year period is 6.5%. You can see the full list of current Zacks # 1 Rank (Strong Buy) stocks here.
American houses 4 rent is an internally managed real estate fund. It focuses on the acquisition, renovation, leasing and operation of single-family houses as rental properties. She rents residential properties primarily in Arizona, California, Florida, Georgia, and Nevada. The company currently has a Zacks Rank # 3 (Hold). The company’s expected earnings growth rates for the current year and next are 10.3% and 11.7%, respectively. Additionally, the company’s projected earnings growth rate for the next five year period is 14%.
NexPoint Residential Trust deals with the acquisition, ownership, operation and selective development of multi-family properties. It operates primarily in the southeastern United States and Texas. The company currently ranks # 3 in Zacks. The company’s expected earnings growth rate for the current year and next year is 4.5% and 7.4%, respectively.
Newmont Corporation is one of the world’s largest gold producers with several active mines in Nevada, Peru, Australia and Ghana. Newmont’s operating segments are North America, South America, Australia, and Africa. The North America segment operates in the USA. The company currently ranks # 3 in Zacks. The company’s expected earnings growth rates for the current year and next year are 24.1% and 11.2%, respectively.
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