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According to a Wall Street bank, US demand5freebingonodepositrequired2022Weakening and persistent inflation may lead to the formation of a stagflation environment, which may affect some well-known stocks.
Stefano Pascale, Anshul Gupta, Riddhiman Dass and Tejas Shah, strategists at Barclays, said in a report released on Tuesday that KMB (Kimberley)5freebingonodepositrequired2022Us) and Procter & Gamble (PG)5freebingonodepositrequired2022Us) are the two most affected companies.
Kimberley's products include Scott toilet paper, Kleenex Kleenex and curious disposable diapers. Procter & Gamble has Pantene shampoo, Crest toothpaste and magnolia oil skin care products.
Choosing these consumer goods companies seems counterintuitive because they are considered part of a defensive industry and consumers tend to continue to buy these products in tough economic times. Barclays has also paid special attention to BALL.US, an aluminum packaging company that is a cyclical materials industry that usually performs poorly in an economic downturn.
Barclays' thinking began with the idea that in a stagflation environment, the main resistance could come from the profit margin pressure of free negative operating leverage. The materials industry, in particular, sold about 20% more in the fourth quarter of last year than it did before COVID-19 's outbreak, but is now facing a weakening price power.
The strategist at Barclays wrote5freebingonodepositrequired2022"at the single stock level, Kimberley, Bauer Packaging and Procter & Gamble are at the top of our bullish selection, and they are all low-priced stocks that have lost the most in a stagflation environment."
U. S. stocks mostly performed well in Tuesday's trading, with the Dow Jones Industrial average rising for a fifth day in a row and Kimberley shares barely fluctuating. Meanwhile, shares of Bauer Packaging and Procter & Gamble rose 0.45% and 0.8%, respectively.