10 Stocks to Perform Stronger With Inflation
As inflation fears rise, Citi (NYSE:C) has compiled a list of companies that have a history of stronger performance when prices increases occur.
The list includes small-cap companies with revenue projections of 8% or higher for the next two years. Most of these companies are associated with energy, materials and consumer staples.
We’ve selected a few well-known ones, and explained why they might do well.
Ann Taylor (NYSE:ANN)
Market Cap: $1.4 billion Expected Stock Gains by 2012: 12.5%
The women’s retailer is poised to do well because its customer base of upper middle class women is fairly inflation-proof and it is a diverse brand that provides professional attire as well as more casual clothes through its LOFT brands.
It has had strong earnings for the past few quarters buoyed by sales growth as well as a pristine balance sheet with cash and equivalents up to $224 million and no debt.
Dick’s Sporting Goods (NYSE:DKS)
Market Cap: $4.4 billion Expected Stock Gains by 2012: 23.6%
The sporting goods store will stay strong during inflation because people need and buy sports equipment all year.
The retailer rallied more than 50% between September and December and is well-positioned to expand operating margins this year.
The company has raised its fourth-quarter and full-year guidance after reporting net income of $26.7 million.
Market Cap: $1.8 billion Expected Stock Gains by 2012: 22.3%
The shoe store chain is well known for selling well-known brands at discounted prices already which will draw more people there over other smaller stores with less stock or department stores which don’t give as good discounts.
It saw major growth in 2010 due to supply agreements with other retailers which helps reduce its overhead and inventory risk.
DSW had strong sales for the fourth-quarter, increased its full-year earnings outlook and plans to acquire Retail Ventures.
Targa Resources Partners (NYSE:NGLS)
Market Cap: $2.5 billion Expected Stock Gains by 2012: 19.6%
The provider of midstream natural gas and natural gas liquid services will continue to post strong sales because natural gas is in high demand all over the world which gives U.S. producers of liquefied natural gas a lot of export potential.
It posted a net income of $35.9 million for the fourth quarter, up from $25.4 million in 2009. The company has capitalized on the partnerships it has made in the last few years.
It will continue to grow this year by completing new commercial projects and acquisition negotiations.
Lincare Holdings (NASDAQ:LNCR)
Market Cap: $2.8 billion Expected Stock Gains by 2012: 39.6%
The company, which provides respiratory therapy and other services to patients in their homes, will continue to post strong revenue. Its main customer base is the rising ageing population which have the highest demand for out-patient services.
It saw a rise in its fourth-quarter profit with revenues of $422.1 million and net income of $46.1 million.
Image: Flickr / Andy DE
Market Cap: $1.2 billion Expected Stock Gains by 2012: 24.4%
The healthcare supply chain and revenue cycle management provider will also do well during inflation because healthcare IT managers and administrators will need help as demands continue to increase.
MedAssets’ 2011 guidance calls for revenue growth of 56-58%.
Aircastle Limited (NYSE:AYR)
Image: Xlibber via Flickr
Market Cap: $1 billion Expected Stock Gains by 2012: 39.4%
The company which acquires, leases and sells commercial jet aircrafts to passenger and cargo airlines, will see growth because its product demand is not only tied to passenger numbers and many airlines are looking to expand or upgrade fleets to be more energy efficient in the face of rising oil.
It is well-positioned to outperform in the next few years because of its solid stock price performance, strong cash flow from operations and growing profit margins.
American Superconductor Corporation (NASDAQ:AMSC)
Image: Kabacchi via Flickr
Market Cap: $1.4 billion Expected Stock Gains by 2012: 31.5%
The company, which makes equipment for power generators and utilities, will hold up in inflation because it provides staple services. Consumers may not buy certain things because of higher prices but they won’t stop using electricity.
It has had 16 consecutive quarters of revenue growth.
Sales for the wind energy market, specifically in Asia, are expected to grow a lot this year. Grid-related product revenues as well as superconductor cable projects are also poised to be major growth contributors.
Market Cap: $866 million Expected Stock Gains by 2012: 36.3%
The wireless phone distributor will remain prosperous as inflation approaches because communication is indispensable and is not something consumers will sacrifice.
It reported a 24% increase in fourth quarter revenue of $1.1 billion compared to the same period in 2009.
It also handled a record 29.1 million wireless units in the fourth quarter.
Graham Packaging Company (NYSE:GRM)
Image: 2D Graphics via Flickr
Market Cap: $1.1 billion Expected Stock Gains by 2012: 23.1%
Despite rising food prices Graham Packaging will still see high demand because it is the top U.S. supplier of plastic containers for many major-name staple brands including Heinz, Minute Maid, Gatorade and Vitamin Water which people will continue to buy.
The plastic container packaging company came out ahead of analyst expectations for the fourth quarter with revenue of $637.15 million. Stronger volumes and initiatives helped provide growth.
It also just acquired Liquid Container which will contribute to revenue growth.