Investing Beyond The Noise podcast: What stocks to look for during inflation
Hi, my name is Dennis Felix. I'm a stockbroker with Van Clemens. The Federal Reserve president recently said inflation will be with us for three years. The market is switching, in my opinion, from big cap growth to inflation hedges. The stocks that will work will be different from the last cycle winners in my opinion. What to look for: companies that can raise their prices above the inflation rate, increasing gross margin, large stock buybacks, stock price below book value, increasing dividends, low payout ratio, low PE ratios, and large real estate holdings.
Technology will better guide the private sector during this cycle of inflation
But above all good business model that addresses inflation. I'm old enough to remember the last big inflation back in the 70s, and its effect on the stock market was devastating. This cycle, the stock market is acting unlike the last cycle. Raw materials producers seem to be moving. How this inflation affects the market will determine the best stocks to own. I think managements of today have a much better tool to deal with inflation. Today's companies have elaborate hardware and software to help them manage through inflation. Investors need to evaluate the mechanisms that management uses to deal with inflation. In my opinion, the CEO comments help you to judge future performance. Remember, it's the future that drives stock prices. Freedom breeds innovation.
If you believe in US corporate innovation, you'll believe in the stock market
The biggest reason to be in the US stock market is to participate in the innovation of US corporations. US companies can create huge wealth for ordinary people. The innovative culture creates new products at a huge scale. Entrepreneurial management differentiates successful companies from unsuccessful companies. You want to own individual stocks to participate in successful, innovative companies. The best ways to select these investments is CEO comments in quarterly reports. These comments often move stocks more than actual data. If subsequent numbers come out, that substantiate the comment, the stock will move for long-term gains. For example, CEO Elon Musk of Tesla. People who recognized his entrepreneurial genius early made a fortune. So, I think management is the key to investment success. And the key to judging management is the company's business model. You can see it mostly in CEO comments in EPS presentations or earnings call. How flexible is it to sudden changes in the economic cycle? Technology is the key to business success today. Does current management have technology background? Do they develop their own software, or buy it off the shelf? How much do they spend on R&D as a percentage of sales? Also, key accounting data, like balance sheet and income statement are key to evaluating how effective management's business plan is. Are numbers trending up or down? Gross profit margin, return on equity can be helpful too. Evaluating stocks is time-consuming. Not everyone has the time necessary to evaluate a large number of companies.
Meet successful, veteran Van Clemens & Co. stockbroker Dennis Felix
That is why you need a good stockbroker to do this for you. Einstein said; I'm not a genius, I just have the curiosity of a small child. And over the years, I've always had a curiosity about why stocks do what they do. That's the reason for my success for over 40 years. And I can do that for you. Give me a call. That's Dennis Felix at 612-758-9146. Thank you and have a nice day.
Related: Learn more stock market keys to success (previous 5 podcasts below)
Value investing and the PE Ratio - Episode 2
Have a diversification mindset - Episode 3
Identify predictable stocks - Episode 4
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The discussions contained in and referred to this podcast are provided for educational, information, and entertainment purposes only. The information, statements, comments, views, and opinions expressed or provided are not necessarily those of Van Clemens and may not be current. Van Clemens does not make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views, or opinions contained in this podcast. Any liability, therefore, is expressly disclaimed. Van Clemens does not undertake any obligation whatever to provide any form of update, amendment, change, or correction to any of the information, statements, comments, views, or opinions set forth in this podcast. You should not make any decision, financial, investment, trading, or otherwise based on any of the information presented in this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisory. You understand that you are using any and all information available on or through this podcast at your own risk.
