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.

Chart, histogram Description automatically generated

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/

Which Stocks are Better to Buy – Oil, Gas or Renewable

The announcement on March 8, by president Biden, claiming all imports of Russian oil, gas, and energy sources will be banned at all American ports of entry has left investors seemingly hawkish, even as the Brent crude was trading well above $100 per barrel, an increase last witnessed in 2008.

The U.S. benchmark, the West Texas Intermediate, was also climbing sharply at the start of March, with prices per barrel toppling close to $120.

Even while consumer demand has remained steady, and countries imposing stricter diplomatic sanctions on Russia, fossil fuels, and renewable energy shares have entered some choppy waters in recent days, leaving investors on both sides of the aisle on whether the oil bubble is set to burst, or if renewables are still the safer bet?

The world is still predominantly oil and gas

While we’ve seen a lot of companies and governments trailing efforts shifting to renewable energy, the world still runs mostly on fossil fuels. From the road and transportation industry, production and manufacturing of goods, to energy and gas, there’s still a hefty reliance on fossil fuels.

As of 2019, around 84% of the world’s energy consumption primarily came from burning fossil fuels, including natural gas, coal, and oil – consumers, and governments are still relying heavily on the need for these fuels.

It does however make it a bit more clear to the investor who’s looking to make a quick buck with the oil and gas rally to see that prices for these energy resources aren’t going to come down any time soon.

With oil and gas prices rising, companies are looking for new ways to explore the market, and investors are willing to jump on the bandwagon, and rising prices are perhaps the last thing that’s putting off investors. During this time, companies in the oil and gas industry aren’t just seeing record-breaking revenues, but it’s also giving them the ability to strategize, as renewables are sweeping across markets.

Exxon Mobil (NYSE: XOM) announced at the start of the year a $22 billion expenditure budget, a hefty jump from the $17 billion in 2021. Exxon operations have gone global in recent years, with deepwater drilling in Australia, the Middle East, selected African waters, and the Permian Basin.

As demand has increased year-over-year, operations have grown bigger, and the positive outlook has for some time calmed any cuts to Exxon’s 4.5% dividend.

XOM can trail a successful year, and its $380 billion market cap is one way to attract investors who are willing to place their bets on Exxon as the fossil fuel movement remains quite strong across the world.

Even if Exxon is not delivering on its promise, there’s still Chevron, who’s been trailing XOM for quite some time, with a market cap just shy of $334 billion, and investors have been seeing positive returns as oil prices have been climbing.

Conoco Phillips (NYSE: COP) has been on investors’ watchlist for most of 2021 and so far 2022 as well. After the acquisition of Concho Resources in 2021, the company’s market cap trailed a healthy $129 billion, marking it as one of the biggest independent oil companies in the U.S.

With soaring oil prices, and its healthy balance sheet after spending more than $9 billion for Shell’s 225,000 net acres in the Texas Delaware Basin, Conoco is increasing its holdings and domestic influence.

The midstream American gas giant, Enterprise Products Partners (NYSE: EPD) is what investors are looking for, delivering increased capacity and production throughout the last few years, and its recent acquisition of Navitas Midstream Partners for $3.5 billion in cash is one indication of the current condition of the company.

As the current economic recovery takes its toll on Americans, with inflation hitting a 40 year high, EPD has been placed in a fortunate position, offering an investment with the ability to hedge inflationary price increases. With most of its debt secured for the long-term at 4.4%, increased prices can be passed off to the consumer, rather than the company itself.

EOG Resources (NYSE: EOG) is perhaps one of the more overlooked oil stocks on the market, yet its market cap of close to $68.97 billion keeps investors well on their heels, with the company constantly developing new technology and production equipment.

EOG places more interest and focus on using technology and big data in drilling operations than in the production, and exporting category. It placed them in a comfortable position, where the company now has acreage in the Eagle Ford shale, and among other giants in the Permian Delaware Basin.

Although environmental efforts and polarizing political agendas have scraped these companies from the spotlight, there’s still a hefty amount of steam left before they’ll witness renewables and sustainability taking a majority stake.

There’s still money in renewables

On the other side of the aisle, renewables have had a difficult road throughout the last few decades, but a push for Environmental Sustainability and Governance (ESG) policies by governments in developed and developing nations has helped them fast-track their global dominance.

SolarEdge Technologies (NASDAQ: SEDG) has been heading into 2022 with a strong pace, with a four-week gain of 23.6% between February and March. Analysts have been keeping an eye on SEDG as it managed to cross its 12-month target price from $327.05 to $328.91 per share.

Upcoming quarterly earnings of $1.31 per share represent a 33.7% change in the last year, with more than $600 million in expected revenues.

Perhaps Albemarle (NYSE: ALB), a global leader in the chemical industry should offer a bit more clarity to the rise in go-green stock purchases. The company which is among the largest producers of lithium saw its stocks rise by more than 58% in 2021.

With the demand for electric vehicles (EVs) and hybrids climbing to never-before-seen highs, Albemarle is perfectly positioned for another stellar year, even as some investors and consumers remain skeptical.

Renewable energy sources have increased by more than 45% in 2020, and these stocks are perhaps in for one rollercoaster year, out betting most estimates, with overall returns of more than 159% since 2019.

The real winner between oil, gas, and renewables is a hard swing, but a swing in the right direction nonetheless. Investors who are looking to increase their returns, while playing it safe are perhaps better off investing in big oil and gas companies.

Although demand for both industries has increased, there’s still no end to the consumption of fossil fuels yet, and as renewables start to take form, even in the most volatile markets there are hopes that their influence will see investors more interested.

Solar, wind, and hydropower stocks remain a stronghold, and a valuable asset to any portfolio, and for investors who are keener on adding stocks that will offer better long-term returns, you should perhaps look to lean more towards renewable stocks.

The deciding factor is irrelevant, in some cases, and investors should consider the risks that come along when choosing either or to invest in. There’s potential to grow, and whether you predict demise on the horizon or not, these stocks can become a vital asset to any portfolio.

EOG Resources Has Big Money Energy

And the Houston-based oil and gas company could rise even more due to a rebound in oil demand, a 2.7% current dividend, and its cost-cutting efficiencies. But another likely reason is Big Money lifting the stock.

So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And EOG has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the Big Money signals EOG has made the last year.

The last few weeks have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

Source: www.mapsignals.com

In the last year, the stock attracted 25 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out technical action grabbing my attention:

Outperformance is important for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, EOG has been growing sales and managing debt nicely. Take a look:

  • 3-year sales growth rate (+3.3%)
  • Debt/equity ratio (+33.3%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, EOG has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

EOG has a lot of qualities that are attracting Big Money. Going way back to 2000, it’s made this list 39 times, with its first appearance on 09/18/2000…and gaining 1,276.33% since. The blue bars below show the times that EOG was a top pick:

Source: www.mapsignals.com

It’s been a top stock in the energy sector according to the MAPsignals process. I wouldn’t be surprised if EOG makes additional appearances in the years to come. Let’s tie this all together.

The Bottom Line

The EOG rally could have further to go. Big Money buying in the shares is signaling to take notice. Shares could be positioned for further upside, and it pays an attractive 2.7% current dividend. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no positions in EOG at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

https://mapsignals.com/contact/