To all that have been paying higher prices recently for a host of different items, the comments from Federal Reserve Chair Jay Powell about the current inflation as being “transitory” may ring pretty hollow. While he could well be right and the situation may be just a short-term event, tell that to homebuilders who have seen a staggering increase in the price of plywood and drivers paying over $3.50 a gallon for gasoline, and that’s those that can get gasoline.
Note that consumer prices jumped again in April and drove the rate of inflation to the highest level in nearly 13 years, signaling some dramatic stress on the economy as businesses are now dealing with supply shortages that are raising the cost of many goods and services. Of course, investors are not happy about this turn of events, combined with an overbought, overleveraged and very overpriced stock market. We have seen some pretty drastic selling, as big-cap tech is getting pounded as inflation shows up and interest rates have turned higher again.
For investors looking to book profits and move to areas that can fight through the inflation backdrop, we screened the BofA Securities research universe for commodities, real estate and other sectors that look solid now. We found five Buy-rated stocks that may be good areas to move to now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Agnico Eagle Mines
This is one of Wall Street’s most preferred North American gold producers. Agnico Eagle Mines Ltd. (NYSE: AEM) is a senior Canadian gold-mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden.
The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983. Gold recently fell off three-month highs, despite a weaker dollar and falling equities as bond yields rose. This backup could offer investors a solid entry point on shares of this leading company now.
Shareholders receive a 2.04% dividend. The BofA Securities price target for the shares is $80, and the Wall Street consensus target is $82.02. Agnico Eagle Mines stock ended Wednesday’s trading at $68.67.