As an investor, I’m always on the lookout for stocks to buy that can withstand market volatility and inflation. With inflation remaining stubbornly high, it’s essential for me to invest in companies that can maintain their pricing power and grow their revenue.
Household names
That’s why I’m going to buy Unilever (LSE:ULVR) and PepsiCo (NASDAQ:PEP). I see them both as inflation-resistant stocks that I believe can do well in these challenging times.
Unilever is a multinational consumer goods company that produces and markets a huge range of products. These include food, beverages, cleaning products, and personal care items.
Some of its well-known brands include Ben & Jerry’s, Dove, and Lipton.
Meanwhile, Pepsi is a global food and beverage company that produces popular brands such as Pepsi, 7UP, and Quaker Oats.
Both have strong brands for which consumers are willing to pay a price premium.
Unilever said it raised prices for its products — including Ben & Jerry’s ice cream and Dove soap — by more than 13% in the fourth quarter. That was the eighth consecutive price hike. And while this meant the company’s sales volumes shrank, it was by a lot less than prices rose. In fact, recent revenue growth at both companies beat analysts’ expectations.
A word from the wise
A brand is a powerful asset that can help companies navigate market volatility and inflation. As Warren Buffett once said: “A brand is a wonderful thing to own during inflation.” Unilever and Pepsi both have strong brands that people have a connection to. That makes them ideal investments in times of inflation, I feel.
However, like all investments, there are risks involved. For instance, despite their brand appeal, both will still face increased competition from cheaper, own-label goods. There’s also the risk of changing consumer tastes. And situation like when Cristiano Ronaldo famously wiped $4bn off Coca-Cola‘s market cap simply by making a barbed comment about Coke at a press conference.
Despite the risks, I believe Unilever and Pepsi are excellent investments for the long term. Both companies have a history of delivering consistent returns to their shareholders.
Additionally, they don’t require such such heavy capital investments as businesses like railways or mining. This makes them even more attractive, as Buffett highlighted. “Brands are a promise in terms of what they’re going to deliver to you,” he said. In the case of Unilever and Pepsi, their brands have been built up over decades. And they live in people’s minds rent-free, representing certain ideals and qualities that keep shoppers coming back for more.
But it’s important to remember as well that both Unilever and Pepsi nurture their brands, investing in marketing and product innovation.
In my view, they’re two excellent examples of stocks that can withstand market volatility and inflation. As an investor, I feel these they’ll deliver excellent returns to my portfolio in the long run. I intend to buy both of them as soon as I next have some spare capital to deploy.
The post 2 inflation-resistant stocks to buy right now appeared first on The Motley Fool UK.
Don’t miss this top growth pick for the ‘cost of living crisis’
While the media raves about Google and Amazon, this lesser-known stock has quietly grown 880% – with a:
Greater than 20X increase in margins
Nearly 60% compounded revenue growth over 5 years – more than Apple, Amazon and Google!
A 3,000% earnings explosion
Of course, past performance is no guarantee of future results. However, we think it’s stronger now than ever before. Amazingly, you may never have heard of this company.
Yet there’s a 1-in-3 chance you’ve used one of its 250 brands. Many are household names with millions of monthly website visitors, and that often help consumers compare items, shop around and save.
Now, as the ‘cost of living crisis’ bites, we believe its influence could soar. And that might bring imminent new gains to investors who’re in position today. So please, don’t leave without your FREE report, ‘One Top Growth Stock from The Motley Fool’.
Claim your FREE copy now
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#FFFFFF’);
})()
More reading
2 UK stocks capable of beating inflation this year
Up almost 20% in a year, why the Unilever share price may keep rising
3 stocks to buy with dividends yielding more than 3%
I’m keen to buy this top FTSE 100 income and growth stock in March
Mark Tovey has no position in any of the shares mentioned. The Motley Fool UK has recommended Unilever Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.