3 Stocks That Can Thrive in Periods of High Inflation

3 Stocks That Can Thrive in Periods of High Inflation

If you’re looking for stocks that could help your portfolio succeed even in an inflationary period, you’ve come to the right place. In this segment of Backstage Pass , recorded on Oct. 15 , Fool contributors Toby Bordelon, Rachel Warren, and Trevor Jennewine discuss three stocks that they think can keep delivering wins for investors despite rising inflation. Should you invest $1,000 in Netflix, Inc. right now?

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Toby Bordelon: First one I want to touch on, we had news today about retail sales.

According to a report issued today by the U.S. Commerce Department, retail sales were actually up looking pretty good. It looks like this increase is driven in part by higher prices, so inflation is actually giving us a boost, at least in nominal terms for now. I’m not quite sure if the volume of goods is still up, or if that’s holding steady, but in terms of dollars spent those are going up. That’s good. The increase in sales we’re seeing suggests that at least some companies have been able to pass on some of the higher prices they’re seeing from inflation and labor costs to consumers, and consumers are willing to pay, though.

That’s my takeaway from this report. The question here, guys, is give me one company you think has pricing power that you think will be able to keep passing on increases to consumers, assuming we see mild inflation. Let’s leave out the possibility of significantly higher inflation. But assuming we have mild inflation continues for the foreseeable future, what’s one company is going to do well? What’s one company that can pass on these prices and so we won’t see a significant drop-off in sales volume in your opinion? I’ll start with you, Rachel.

Rachel Warren: I think it is interesting to note that at the end of the day consumers are willing to pay these prices even with, as we’re seeing this uptick in inflation. Because at the end of the day, a lot of it is the basic goods that we all rely upon. For me in terms of a company that I think really has pricing power and can pass on price increases to consumers without seeing a significant decrease to a top or bottom line. I’m going with a big name here and that would have to be Amazon ( NASDAQ:AMZN ).

I think first of all, this company has such an immense e-commerce platform. I was looking at some statistics about this. As of February of this year, Amazon accounted for more than 40% of the e-commerce market in the U.S. alone. That’s just one of the markets in which it operates in, and I think that this gives Amazon a really fantastic competitive edge. Despite the fact that the e-commerce industry itself hasn’t been immune, it still continuing to control this very high-growth market where customers are paying the prices that are put forth to them.

Because whether it’s goods that we need or goods that we want, people go to Amazon, people trust Amazon. I think its brand authority is something that has continued to help it be a mainstay even as inflation rises. Consumers know and trust this company, and I think that really enables Amazon to adjust its prices as needed without seeing a significant drop in its sales. It’s definitely not been a secret through the years, Amazon has historically been known to have significant pricing power across the range of industries that it’s involved in while at the same time growing its customer base.

I think another thing as I was thinking about this question that I really believe helped Amazon to be so well positioned, to withstand the global surge in inflation is the fact that it does have a really diversified business that draws a really diversified stream of customers. We’ve talked about this foothold that it has on the e-commerce market. But then you also consider this other key source of revenue and profits for Amazon, and that’s Amazon Web Services, its cloud […]

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