If you were a big fan of “That ’70s Show,” get ready because we are soon going to get a revival, and it likely will not be anywhere near as entertaining. Many across Wall Street feel that the looming specter of stagflation is right around the corner. By definition, stagflation is a stagnant economy that is weakened by inflation. The inflation component is in place, and the question being discussed on Wall Street is the stagnant economy. Many of the 1970s stagflation ingredients are in place now. The aforementioned inflation, high commodity prices, massive budget deficits and profligate government spending are just a few of the items stirring the pot.
Wednesday before the opening bell, we will get what likely will be more bad inflation news. With layoffs looming across many sectors, claims for unemployment are holding near nine-month highs. Don’t let the huge job numbers from Friday fool you. The economy is slowing. Two-quarters of negative gross domestic product growth combined with a two-year and 10-year Treasury inversion that is the widest since the dot-com crash are all strong signals of a slowdown.
Now is the time to move to stocks that perform well during periods of stagflation. We screened our 24/7 Wall St. research database looking for stocks in the sectors that historically outperform during stagflation, which included value stocks, commodities, aerospace and defense, real estate investment trusts and more. These seven top stocks that are Buy rated and come with solid dividends made the cut.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Digital Realty Trust
This top data center stock is a solid play on the huge cloud and streaming content revolution. Digital Realty Trust Inc. (NYSE: DLR) supports the data center and colocation strategies of more than 600 firms across its secure, network-rich portfolio of data centers located throughout North America, Europe, Asia and Australia.
Digital Realty’s clients include domestic and international companies of all sizes, ranging from financial services and cloud and information technology services to manufacturing, energy, gaming, life sciences and consumer products. The company rates highest with portfolio managers, as 8.39% of the market cap of the company is in institutional hands.
Top analysts cite the solid dividend and the potential for dividend growth. Many also feel that data center pricing is still favorable and the growth in adoption of the cloud is a huge positive going forward. Some on Wall Street also feel the stock is underweighted by active managers and could see an uptick if they started adding shares later in 2022.
Digital Realty Trust stock investors receive a 3.73% distribution. The Jefferies price target is $160, while the consensus target is $157.21. The shares closed on Monday at $130.98.
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