Rising inflation has brought down stock values as uncertainty has increased. But a number of companies are able to raise prices and pass on the costs of inflation to their customers.
That makes these companies able to maintain or even grow their profit margins during multi-decade high inflation. Once markets stop their current downtrend, these companies could continue to pay off and reward investors in the future.
Consumer goods companies are best positioned for this trend. In this space, one leader is Clorox (CLX). Shares initially rallied during the start of the pandemic, but have now more than given up their gains.
But analysts see the company as a strong performer here. The company’s ability to raise prices and maintain sales continues to make it look strong.
Action to take: Shares are fairly priced at about 26 times forward earnings. The company saw about a 2 percent increase in revenue last year, but that looks on track to increase in the year ahead. In the meantime, the stock yields about a 3.3 percent yield.
For traders, the January $160 calls, last going for about $7.85, offer mid double-digit gains in the months ahead. Such a move higher in shares will likely start after another market downtrend in the coming weeks, so traders should look to buy at a lower price.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.