This is certainly not a market many would categorize as one with numerous screaming buys to go after. Indeed, the macro backdrop remains uncertain, with geopolitical tensions high and a Federal Reserve intent on keeping interest rates high to battle inflation. That said, the Fed’s fight against inflation is resulting in some ground being gained, and stocks to buy amid slowing inflation. In fact, right now, many inflation metrics are coming down. Plus, considering the lagging effect of some of the data, it’s possible we could actually be in the midst of a lower-inflation environment. Thus, it actually may be possible for the unicorn-like soft landing to really take place, given the strength of the labor market of late.
Restrictive monetary policy has hampered demand, though the supply of many goods in the economy remains tight. This has led to a rather robust period, relative to expert expectations, of late. If this continues, and inflation continues to move in the right direction, there are some stocks I’d call screaming buys right now. Here are three stocks to buy amid slowing inflation I have an eye on.
| PEP | PepsiCo | $181.90 |
| TGT | Target | $126.48 |
| AAPL | Apple | $183.79 |
PepsiCo (PEP)
PepsiCo (NASDAQ:PEP) has managed to post substantial revenue increases in recent quarters. This is impressive, considering the company’s established position in a mature market. In April, management disclosed that organic revenue soared by 14% in Q1, prompting an upward revision of Pepsi’s 2023 sales forecast. Pepsi now anticipates an additional 8% revenue increase on top of last year’s 14% surge.
Despite a slight decline in overall sales volumes, higher prices for snacks and beverages contributed to positive performance. Food segment volume decreased by 3%, while beverage volume increased by 1%. CEO Ramon Laguarta expressed satisfaction, highlighting the resilience of Pepsi’s categories and geographies. Thus, inflation hasn’t impacted this consumer discretionary name as much as many expected. We all seem to want our inexpensive treats, and PepsiCo is a company that provides these in droves.
The company also recently announced a 10% dividend increase and raised its full-year organic growth guidance. With a strong brand and an impressive track record of 51 consecutive years of increasing annual payouts, this food and beverage conglomerate presents an appealing investment opportunity. Dare I say it, this could be a screaming buy, if we see the so-called soft landing everyone is looking for materialize.
Target (TGT)
Despite being a prominent big-box retail giant, Target (NYSE:TGT) has experienced a contrasting performance compared to the soaring stock market. The company’s shares have decreased significantly during the previous week, losing nearly 8%.
While Target has successfully decreased inventory levels, the company is currently encountering challenges from various angles. Inventory shrinkage, which includes theft, is anticipated to impact profits negatively by over $500 million this year. Additionally, according to an analyst from KeyBanc, the resumption of student loan payments later in the year might diminish the spending capacity of Target’s customer base.
However, Target has experienced a remarkable increase in dividends of more than 150% during the previous ten years, together with a large decrease in the number of shares outstanding, leading to a steady rise in earnings per share. Target has maintained a phenomenal growth rate of over 40% over the past ten years notwithstanding an earlier fall in profitability, demonstrating its ability to operate well throughout times of slowing in the economy. Thus, this is more of a screaming buy in weak economic periods, putting this stock on my radar right now.
Apple (AAPL)
Apple’s (NASDAQ:AAPL) stock rose in anticipation of its WWDC Developer Conference, where it unveiled new virtual reality headphones. Better, the AR market research indicates a 42% CAGR till 2030. Apple’s innovative headset has unparalleled capabilities, poised to lead the industry. With AR’s bright future, investing in Apple’s Vision Pro is a compelling opportunity. Investors should take into account that as Apple matures, it is likely to consistently increase its dividends.
On the date of publication, Chris MacDonald has a position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.