Have Stagflation Concerns? 3 Stocks to Help You Overcome It

Stagflation sounds like an ominous term, but the fact of the matter is that we’re all experiencing it now—inflation, plus slow or stagnant rates of economic growth and relatively high unemployment rates. Think of the high inflation from 40 years ago, from the 1970s and 1980s, when oil prices skyrocketed and inflation and unemployment soared.

Contributor Depositphotos.com/Depositphotos.com – MarketBeat

Now that Russia has invaded Ukraine, inflation concerns are also impacting commodities like oil and wheat.

In this section, we’ll help you through what to invest in during times of stagflation and name three stocks to consider.

What to Invest During Times of Stagflation

Economists and investors have alarms sounding because stagflation combines the worst parts of a recession with rising prices. When you have a combination of stock declines and unemployment over the long term, it can have an impact on your portfolio. But are doomsday predictions really in line? No — business profits are rising rapidly and at the federal level, the screw is inflationary trying to control it. As with most things, your portfolio should stand the test of time, but there’s no reason now why you can’t scoop up some real winners.

3 Stocks to Invest Right Now

Let’s take a look at three stocks to consider during these unique economic times. We will feature Vale SA, Nutrien Ltd., and Halliburton Company in this section.

Vale SA (NYSE: VALE)

Vale SA, headquartered in Rio de Janeiro, Brazil, manufactures and exports iron ore, pellets, manganese and iron alloys. It operates through three main segments: ferrous minerals, base metals, and coal. The company produces and extracts iron ore, iron ore pellets, manganese, other ferrous products, nickel and its by-products, as well as metallurgical and thermal coal.

The company’s adjusted EBITDA was $33.8 billion in 2021, $11.8 billion more year-on-year, mainly due to higher realized prices in iron and copper minerals, partially offset by higher costs associated with commodity prices and shipping .

Net income reached $22.4 billion in 2021, $7.6 billion more year-on-year, due to higher pro forma adjusted EBITDA and stronger financial results. In March, June and September 2021, $13.5 billion was paid out in dividends and the company’s board will pay an additional $3.5 billion in dividends.

The company saw higher sales volume ($1.433 billion) with iron ore fines and pellet sales increasing 23.3% leading to record sales of iron ore fines in Q4.

Nutrition (NYSE: NTR)

Nutrien Ltd., headquartered in Calgary, Alberta, manufactures and distributes products for agricultural, industrial, and feed customers. It operates through the retail, potassium, nitrogen and phosphate segments, meaning the company distributes plant nutrients, plant protection products, seeds and merchandise. The potassium, nitrogen, and phosphate segments produce different chemical nutrients contained in each product.

Nutrien generated a net profit of $1.2 billion and recorded an adjusted EBITDA of $2.5 billion in Q4 2021 while generating a net profit of $3.2 billion and a record adjusted EBITDA of $7.1 billion for the full year 2021. Cash flows provided by operating activity in the full year was $3.9 billion.

Nutrien issues full 2022 adjusted EBITDA and adjusted earnings per share guidance of $10.0 to $11.2 billion and $10.20 to $11.80 per share. The adjusted earnings per share guidance includes our plan to allocate a minimum of $2 billion to share buybacks by 2022 at a balanced cadence throughout the year.

Halliburton Company (NYSE: HAL)

The Halliburton Company, headquartered in Houston, Texas, provides services and products to the energy industry related to the exploration, development, and production of oil and natural gas. It strengthens, stimulates, and specializes in intervention, pressure control, specialty chemicals, artificial lift, and finishing services. The drilling and evaluation segment provides field and reservoir modeling, drilling, evaluation, and wellbore placement solutions so that customers can model, measure and optimize their well construction activities.

Halliburton Company announced net income of $824 million, or $0.92 per diluted share, for Q4 2021, compared with Q3 results of $236 million, or $0.26 per diluted share. Adjusted net income for Q4 2021, excluding tax adjustments, was $320 million, or $0.36 per diluted share. This compares with adjusted net income for Q3 2021, excluding special items, of $248 million, or $0.28 per diluted share. Halliburton’s total revenue in Q4 2021 was $4.3 billion compared to revenue of $3.9 billion in Q3.

Total revenue for the full year 2021 was $15.3 billion, an increase of $850 million, or 6% from 2020. Reported operating income for 2021 was $1.8 billion, up from a $2.4 billion loss from last year and a lower operating income. adjusted by $1.4 billion for 2020.

Fight Stagflation Now

This is a good time to own low-valued stocks with high free cash flow and dividend-paying stocks. When dollars aren’t very valuable, you might also want to consider investing in crypto. Commodities such as precious metals, industrial metals, and other industrial and agricultural goods can help you through periods of stagflation.

In addition, value and cyclical stocks are also trading below what analysts think are worth and stocks that follow cyclical economies. Gold often performs well in stagflationary environments as it serves as a safe-haven asset during periods of economic uncertainty.

You may want to consider inflation-linked bonds (though they don’t offer outstanding returns), the defensive equity sector (such as healthcare) or other sectors that do well during periods of weaker economic growth. It’s also an opportunity to switch to the traditional slow-moving during inflationary periods, preparing your portfolio for when GDP growth picks up again in the future.