Well, it only took a little over a year, and a massive increase in the federal funds rate, but the inflation that has dogged the American consumer since early 2021 is finally subsiding. With Tuesday’s inline to lower consumer price index data, it is likely the Federal Reserve will announce a pause in its rate hiking cycle on Wednesday. While on the surface that seems like a positive (and it is), the 4% year-over-year increase is still double the Fed’s target rate of 2%, and it is quite possible that another rate hike will come in July.
Given that the spiraling 9.1% inflation at this time last year has been more than cut in half, we decided to screen our 24/7 Wall St. research database for the companies that do better when inflation is falling. The following five top stocks hit our screens. All are rated Buy on Wall Street, pay shareholders dependable dividends and, most importantly, have a negative correlation to U.S. inflation and perform best when inflation trends lower.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
While somewhat off the radar, this blue chip looks poised to trade much higher. Ball Corp. (NYSE: BLL) supplies aluminum packaging products for the beverage, personal care and household products industries in the United States, Brazil and elsewhere.
The company manufactures and sells aluminum beverage containers to fillers of carbonated soft drinks, beer, energy drinks and other beverages. It also develops spacecraft, sensors and instruments, radio frequency systems, and other technologies for the civil, commercial and national security aerospace markets, as well as offers defense hardware, antenna and video tactical solutions, civil and operational space hardware and systems engineering services.
In addition, the company designs, manufactures and tests satellites, remote sensors and ground station control hardware and software. It provides launch vehicle integration and satellite operational services. Further, it offers target identification, warning and attitude control systems and components; cryogenic systems and associated sensor cooling devices; star trackers; and fast-steering mirrors to the government agencies or their prime contractors.
Additionally, the company manufactures and sells extruded aluminum aerosol containers, reclosable aluminum bottles, aluminum cups and aluminum slugs.
Investors receive a 1.52% dividend. BofA Securities has a $65 target price on Ball stock. The consensus target is $60.41, and shares closed on Tuesday at $54.32.
This remains the undisputed leader in the home improvement retail category, and summertime is huge for the company. Home Depot Inc. (NYSE: HD), a home improvement retailer, sells various building materials, home improvement products, lawn and garden products and décor products, as well as facilities maintenance, repair and operations products.
The company also offers installation services for flooring, water heaters, baths, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces and central air systems, and windows. In addition, it provides tool and equipment rental services. The company primarily serves homeowners, as well as professional renovators/remodelers, general contractors, maintenance professionals, property managers, building service contractors and specialty tradesmen, such as electricians, plumbers and painters.
Besides through Home Depot stores, the company also sells its products online, including via Blinds.com, a site for custom window coverings, and The Company Store, a site for textiles and décor products.
Shareholders receive a 2.78% dividend. Wells Fargo’s price target is $345, and Home Depot stock has a $313.39 consensus target. The closing share price on Tuesday was $300.08.
This grocery chain giant is always a solid idea when the going gets rough as people tend to go out less, and it is a big Warren Buffett holding. Kroger Co. (NYSE: KR) operates as a retailer in the United States with a focus on combination food and drug stores, multi-department stores, marketplace stores and price impact warehouses.
Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood and organic produce. Its multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products and toys.
The company’s marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys. The price impact warehouse stores provide grocery and health and beauty care items, as well as meat, dairy, baked goods and fresh produce items.
Kroger also manufactures and processes food products for sale in its supermarkets and online, and it sells fuel through 1,613 fuel centers. As of January 29, 2022, the company operated 2,726 supermarkets under various banner names in 35 states and the District of Columbia.
Kroger stock comes with a 2.24% dividend. The BofA Securities target price is $75, well above the consensus target of $52.13 and Tuesday’s close at $46.86.
This iconic American beer company did merge with a Canadian beer giant, but it is still based in Denver. Molson Coors Beverage Co. (NYSE: TAP) is one of the world’s largest brewers (more than a 3% global share) with core brands Coors Light, Miller Lite, Carling, Molson Canadian and Staropramen.
Molson and Coors merged in February 2005 and added StarBev in 2012, and it serves markets including the United States, Canada, Eastern Europe and the United Kingdom and Ireland, with exposure to other markets through its Molson Coors International division. It acquired the remainder (58%) of the U.S. joint venture (MillerCoors) in mid-October 2016.
The Coors light brand remains a huge favorite with Generation X and baby boomers, who were all around when the light beer revolution started. In addition, a marketing gaffe by InBev, the owner of Bud Light, has paved the way for some disgruntled customers to change their beer-drinking loyalty to the company’s products.
The dividend yield here is 2.48%. The $75 Jefferies price target compares with a $65.44 consensus target. Molson Coors Beverage stock closed at $67.75 on Tuesday.
This discount retailer continues to be a favorite with cost-conscious consumers. Ross Stores Inc. (NASDAQ: ROST) operates off-price retail apparel and home fashion stores that primarily offer apparel, accessories, footwear and home fashions. About 75% to 80% of the company’s customers are women shopping for themselves or family members.
The company’s Ross Dress for Less stores sell its products at department and specialty stores primarily to middle-income households. Its dd’s Discounts stores sell its products at department and discount stores regular prices to customers from households with moderate income. As of February 10, 2022, it operated approximately 1,900 off-price apparel and home fashion stores in 40 states, the District of Columbia and Guam.
Investors receive a 1.26% dividend. Ross Stores stock has a $124 target price at J.P. Morgan. That compares with a $119.42 consensus target and Tuesday’s closing print of $106.43.
The inflation issue is not over, but the long struggle is likely much closer to the end than the beginning. These five top companies should do very well in a falling inflation environment, and their stocks make sense for long-term investors looking to stay long the market but wanting to avoid chasing technology, which has led the market rally this year.
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