♟ Three New "Inflation-Proof" Stock Picks

 
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Three New "Inflation-Proof" Stock Picks
Bryan Bottarelli, Head Trade Tactician, Monument Traders Alliance
Pawn Chess Piece I've identified three stocks that could increase their costs and pass them onto customers without losing any sales - thus making them effectively inflation-resistant.
 

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WAROverheard Inside The War Room
Pawn Used-car sales rose 69% from last April. Plays like CVNA and VRM could be beneficiaries.
Pawn There's been a lot of talk about the stay-at-home stocks losing their luster now that things are reopening. I believe CHWY and TDOC are two trends that will stand the test of time no matter whether we're locked down or fully open.
Pawn Members got in and out of NUGT this morning for gains of up to 20% in 20 minutes! Click here to start your trading journey!
 
Bryan Bottarelli
Just like when your annoying neighbor reports you for a noise complaint the moment the clock hits 10:01 p.m. on Saturday night...

Nothing kills a Wall Street party quite like the dreaded "I" word...

This past week, when the consumer price index for April registered 4.2% higher than one year ago, it officially triggered a renewed set of inflation fears that pushed the major market indexes aggressively lower Monday, Tuesday and Wednesday.

Some even said that this inflation, and subsequent downside move, was a direct result of stimulus shock.

Okay, here's how to best manage this as traders...

Let's use history as a guide for what we should expect and how we should position ourselves to continue profiting through these renewed inflation fears.

We'll start with some history...

During the great inflation period from mid-1960 to early 1980, oil, gas, agriculture, and metals and mining stocks outperformed the broader market - which could be relevant again today.

As I'm sure you know, inflation is scary because most companies have a hard time passing increasing costs onto customers - thus their profitability erodes as inflation increases.

That's why inflation fears put Wall Street in such a rotten mood.

However, I've identified three stocks that could increase their costs and pass them onto customers without losing any sales, thus making them effectively inflation-resistant.

Those three names are detailed below...

"Inflation-Proof" Pick No. 1: Caterpillar (NYSE: CAT)

If the global economy continues its cyclical recovery, combined with the major infrastructure spending plan that's earmarked over the next decade, Caterpillar stands to benefit. Its construction and infrastructure equipment paired with its mining and aggregates equipment sector offer a strong tailwind even in the face of an inflationary environment.

"Inflation-Proof" Pick No. 2: Sherwin-Williams (NYSE: SHW)

Last week, the major paint manufacturer reported a profit of $2.06 a share, which was well above the forecasts for $1.64. Sales of $4.66 billion also topped the expectations for $4.51 billion. In the midst of beating these numbers, Sherwin-Williams announced a 3% to 4% price increase to U.S. and Canadian customers - which became effective on February 1. This shows you that if it can raise prices while still beating sales, it can survive any incoming inflationary pressures.

"Inflation-Proof" Pick No. 3: Stanley Black & Decker (NYSE: SWK)

Historically speaking, Stanley Black & Decker has been able to pass 30% to 50% of inflation onto customers through price increases. And everyone reprioritizing their outdoor spaces - ditching their gas-powered lawn motors, hedge trimmers and weed wackers and replacing them with a new battery-powered electric fleet of tools from Stanley Black & Decker - could make it a safe play even in the midst of an inflationary environment. I don't know about you, but not having to winterize a lawn mower or worry about which special oil to use for the engine each year and instead simply click in an electric battery to mow the lawn seems like a dream come true. Apply that to power tools as well, and Stanley Black & Decker could be ready to capture a major replacement cycle for all things electric-powered.
 
Black And Dekcer Daily Chart
 
Action Plan: Caterpillar, Sherwin-Williams and Stanley Black & Decker all represent inflation-proof plays that should be bought on dips. From a trading perspective, Caterpillar and Stanley Black & Decker look like call plays, while Sherwin-Williams lends itself better for a call spread. I'll be actively trading all three inside The War Room and perhaps in our weekly video letter - Trade of the Day Plus.

Yours in smart speculation,
Bryan Bottarelli Signature
Bryan Bottarelli, Head Trade Tactician
Monument Traders Alliance
 
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WAR Room Testimonials
  
WAR King Rick R. May 17, 2021, 10:23 a.m.
Hey Bryan, another tip of the hat to you sir. A 20% gain in 20 minutes on NUGT (in at $5.80 and out at $6.97). Nice one!
  
  
WAR King Joseph S. May 17, 2021, 2:35 p.m.
In CAT at $4.95 out at $6.07 for a nice gain of 22% in less than three hours.
  
 
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