Pro: buy these stocks to hedge against inflation

on Feb 11, 2022
  • The U.S. inflation jumped 7.5% in January, highest since 1982.
  • Catherine Faddis picks three stocks to hedge against inflation.
  • She explained her reasons for being bullish on these on CNBC.

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The U.S. inflation jumped to 7.5% in January but that doesn’t necessarily have to mean “losses” for equity investors. According to Grace Capital’s Catherine Faddis, the following three stocks have significant upside to keep those profits pouring in amidst inflationary pressures.

Why Faddis is bullish on Amgen Inc

Her first pick is the $130 billion biotech giant, Amgen Inc (NASDAQ: AMGN). The bullish call is particularly interesting since the stock has already gained more than 15% in less than three months. On CNBC’s “Worldwide Exchange”, she said:

Stock is still cheap yielding 3.2%, trades at a discount to the market, PE of 21 times, price of FCF 15 times. Management, the best part, has put out revenue growth targets all the way to 2030. So, mid-single-digits revenue growth. They’ll buyback $6.0 billion in stock in Q1. I think this one’s a buy.

Earlier this week, Amgen said COVID-19 products helped beat profit estimates in the fiscal fourth quarter. Its Q4 sales, however, were marginally lower-than-expected.

What else does she like?

Another name that pops out to her is Waste Management Inc (NYSE: WM) – down 13% for the year with a price to free cash flow multiple of 29 times. Faddis said:

They’re also a big recycler now. There’s an ESG story. They’re into renewable waste, solid waste turned into methane that goes back into the grid. They’re spending $800 million into 17 landfill sites. They already supply gas for 20% of their fleet, it will go to 90% over time. So, I like this.

After a 65% hit to the stock price in five months, the Grace Capital founder and CEO finds PayPal Holdings a great buy at current valuation as well.