Americans Are Angry About Inflation, and Neither Party Has an Answer. 3 Defensive Consumer Stocks to Own Right Now.
Key Points
The world’s biggest brick-and-mortar retailer’s sheer scale provides it with an unfair pricing advantage.
Loyalty to Procter & Gamble’s brands is high, giving it a bit of extra pricing power. Its deeper marketing pockets take care of the rest.
Utility outfit Duke Energy doesn’t seem to be anything special, but it enjoys its position as a provider of something consumers must have, with few other choices to get it.
American voters have spoken, and they're not happy about the higher prices they're paying for... well, pretty much everything. A recent poll commissioned by CNN indicates 55% of voters' top concern right now is the skyrocketing cost of living. That's more than twice the share of any other issue on their minds at this time.
Regardless of the underlying politics, the lingering problem of inflation is clearly too big for investors to ignore. To this end, here's a closer look at three names that can not only stand up to this headwind but may even benefit from it.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
1. Walmart
This isn't anything brick-and-mortar retailer Walmart (NASDAQ: WMT) hasn't survived, or even thrived on, before. The last time inflation raced out of control, after the COVID-19 pandemic lull in 2022, the company frequently touted that most of its market share gains were coming from households earning $100,000-plus per year who weren't regular shoppers at its stores before. It's still happening, in fact, as CEO John Furner noted during the Q4 earnings conference call in February.
This resilience makes sense, of course. Thanks to its sheer size and scale, Walmart can afford to offer the lowest possible retail prices on most consumer goods.
2. Procter & Gamble
Procter & Gamble's (NYSE: PG) products may not be the cheapest options on store shelves. They are usually the best-known, though, with brands like Tide laundry detergent, Pampers diapers, and Charmin toilet paper part of the P&G family.
These are goods many consumers have used for much of their lives, and loyalty to them is high. This ultimately means P&G enjoys pricing power even in challenging economic environments.
Image source: Getty Images.
Procter's real strength in tough times, however, is its sheer size and what that provides it. This company can -- and usually does -- simply outspend challengers like Colgate-Palmolive or Clorox on marketing and promotion. It's not unusual, in fact, for P&G to be the world's most prolific advertiser. And the company's got 70 consecutive years' worth of dividend increases to verify it can push through inflationary headwinds, making it a Dividend King.
3. Duke Energy
Last but not least, add Duke Energy (NYSE: DUK) to your list of consumer-facing stocks to own while inflation is high.
Even by utility stock standards, Duke Energy is a pretty plain-vanilla pick. The company serves nearly 9 million customers in the southeastern quarter of the United States, delivering power produced by a predictable combination of natural gas and coal but also nuclear and hydroelectric power.
There's nothing especially special about it, which may be why its stock hasn't quite kept up with some of its peers' gains of late.
Don't draw the wrong conclusion from this recent performance, however. Duke Energy is evolving to meet the ever-growing energy needs of artificial intelligence (AI) data centers. It's just doing so with less fanfare.
The real reason to own a piece of dividend-paying Duke while inflation is undermining much of the domestic economy, though, is that paying for electricity is practically compulsory. People will make a point of keeping their lights on regardless of the cost.
James Brumley has positions in Procter & Gamble. The Motley Fool has positions in and recommends Colgate-Palmolive and Walmart. The Motley Fool recommends Duke Energy. The Motley Fool has a disclosure policy.