Inflation became even more prevalent in market conversations last month, with the latest consumer price index statistics showing prices increasing 5% year over year. Furthermore, the Federal Open Market Committee revised its prediction for the next interest rate hike, with the majority of central bank executives now expecting rates to rise in 2023, a year earlier than previously expected. With inflation at an all-time high as we enter the first full month of summer, here are five of the best stocks to purchase in 2021:
Citizens Financial Group
Lowe’s Cos.
Berkshire Hathaway
Alibaba Group
Centene Corporation
Citizens Financial Group (CFG)
This modest provincial bank, believe it or not, is the oldest company on this list by nearly a century. CFG, which was founded in 1828, provides consumer and commercial loan operations, credit cards, wealth management, and a variety of other services that traditional banks provide.
Banks are ideally positioned to be among the greatest companies to purchase in the future years, particularly if inflation rises and the Fed is forced to hike interest rates sooner and more quickly than expected. In increasing rate situations, banks gain more money because the difference between what they pay depositors and what they charge borrowers widens.
CFG pays a 3.4 percent dividend and trades for less than its book value, making it one of the few best stocks to purchase in a hot market.
Lowe’s Cos. (LOW)
Even after climbing more than 19 percent year to date, Lowe’s stock remains an attractive buy, having been named one of U.S. News’ 10 best companies to buy for 2021. Lowe’s is not only a key player in the home improvement boom that has lasted over a year, but it also has a smaller footprint than rival Home Depot (HD), allowing it to expand more quickly than its main opponent.
Analyst projections for five-year earnings per share growth reflect this, with analysts anticipating a 19.1 percent increase vs 10.7 percent for Home Depot. Despite these high expectations, Home Depot trades at over 21 times forecast earnings, compared to 16 times for LOW.
Last quarter, comparable sales, one of the most important measures in the retail industry, increased by 25.9%. Lowe’s is still reasonably priced, with space to grow as July approaches.
Berkshire Hathaway (BRK.B, BRK.A)
Although not as small as Citizens Financial Group, the $640 billion Berkshire Hathaway is a strong selection in a rising rate environment, such as the one expert forecast over the next few years.
Berkshire Hathaway is a massive holding firm with a lot of exposure to the insurance business. The “float,” or unspent premiums that customers pay to the insurance firm before any claims are paid out, is notoriously coveted by CEO Warren Buffett. Insurers then invest that money, with many of them putting a large portion of it in fixed-income products like bonds and treasuries.
Analysts predict a 25% increase in earnings per share in 2021.
